[fnEditorial] Absurd Demand by U.S. Government for Shares in Exchange for Semiconductor Subsidies

The U.S. plan to provide subsidies to companies building semiconductor factories domestically in exchange for acquiring shares is nothing short of shocking. U.S. Secretary of Commerce Howard Lutnick appeared on CNBC on the 19th (local time), arguing that "receiving shares in exchange for subsidies under the CHIPS Act is a legitimate approach for U.S. taxpayers." Former President Joe Biden intended to simply give away the subsidies, but President Donald Trump argued that converting them into shares was for the American people, claiming this was Trump's way. Reuters also reported similar content on the same day.

The subsidies under the CHIPS Act are a project strongly pushed by the Biden administration to restore the semiconductor supremacy lost to Asia and revive the collapsed U.S. manufacturing industry. Although the Trump administration expressed reluctance about these subsidies during the election period, they are not the type of support that can be eliminated with a change in administration. For domestic companies, subsidies can be given and corresponding shares can be acquired. Previously, U.S. media reported that the U.S. government would give subsidies to Intel and acquire a 10% stake.

Intel is a representative semiconductor manufacturer in the U.S. However, in recent years, it has failed to secure core technology due to management difficulties. Its manufacturing base is not solid enough locally to take on the role of leading the U.S. semiconductor revival. The U.S. has brought in Samsung Electronics and SK Hynix, the world's strongest in memory semiconductors, and TSMC, the world's number one foundry (contract manufacturing) in Taiwan, for this reason. Giving subsidies to Intel and acquiring shares is a measure that can be taken against domestic companies, but presenting a share claim to foreign companies attracted by subsidies is inconsistent.

Secretary Lutnick's remarks are practically no different from saying that CHIPS Act subsidies will not be given. If the Intel method is applied to foreign companies, Samsung Electronics would have to give 1.5%, SK Hynix 0.3%, and TSMC 0.5% to the U.S. government. Samsung and TSMC are representative companies of Korea and Taiwan. It is likely that the company's board of directors will not allow the U.S. government's share. This leads to the view that the intention is to make companies give up the subsidies themselves.

The subsidy Samsung Electronics is set to receive for building a plant in Texas is $4.75 billion (about 6.6 trillion won). SK Hynix, which is constructing a packaging plant in Indiana, is set to receive $458 million (about 640 billion won). Giving this up would be a huge loss. President Trump is pressuring to impose a 300% tariff on semiconductor items for companies that do not invest in the U.S. Demanding shares from investing companies and imposing tariffs on non-investing companies is outrageous.

As the controversy arose, the presidential office drew a line, saying it was "unfounded." However, since it is difficult to see Secretary Lutnick's remarks as personal thoughts, the government should not ignore them and must first understand the true intent. The CHIPS Act subsidies were backed by intergovernmental agreements. Ahead of the summit, the private sector must come together to devise the best strategy.