The United States allocates US$52 billion to support semiconductor production

The Democratic leader of the U.S. Senate, Schumer, announced the revised bipartisan legislation on Tuesday evening local time, approving the allocation of US$52 billion to vigorously promote the production and research of semiconductor chips in the United States in the next five years.

Schumer tweeted: “I just submitted the US Innovation And Competition Act as an amendment to the Endless Frontier Act to combine the legislation of the various committees. Get up. The Senate has just taken the next step and passed this once-in-a-lifetime investment in American science, technology, and manufacturing.”

After submitting the revised bill, Schumer issued a statement saying: “This bill will enable the United States to surpass China and other countries in key technology areas such as semiconductors, create high-paying jobs for the United States, and help improve my country’s economy and national security.” The bill will also establish a project to provide financial assistance for the construction, expansion, or modernization of semiconductor manufacturing plants in the United States.

In addition to the United States, Japan and South Korea have recently announced increases in spending on local chip semiconductors. According to Nikkei News, Japan plans to expand its existing 200 billion yen ($1.84 billion) fund to increase local production of advanced semiconductors and batteries.

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According to Korean media reports, South Korea plans to invest about 450 billion U.S. dollars in the next ten years and will provide long-term loans of about 883 million U.S. dollars to the local chip industry. Samsung will invest about 151 billion U.S. dollars in chips in the next ten years. The US$17 billion 5nm chip factory in the United States may start construction in the third quarter of this year.

The US $52 billion chip emergency funding proposal approved

The U.S. emergency funding proposal will be included in a more than 1,400-page amendment bill to be considered by the U.S. Senate this week. The bill will invest $120 billion in basic research and advanced technology research in the United States to better compete with China.

Schumer said the bill includes a “historical $52 billion investment to ensure that the United States maintains its leading position in chip production.”

“The U.S. manufacturing industry is severely affected by the shortage of chips.” Schumer mentioned, “We can’t rely on foreign chip processors at all. This amendment will ensure that we don’t have to do this.”

The proposal includes an emergency supplemental appropriation of 49.5 billion U.S. dollars to fund the chip clause contained in this year’s National Defense Authorization Act, but the clause requires funding through a separate process.

This measure will “support the rapid implementation of the semiconductor provisions in the National Defense Act.” According to Reuters, the bill includes US$39 billion in production and R&D incentives, as well as a US$10.5 billion implementation plan, including the National Semiconductor Technology Center, the National Advanced Packaging Manufacturing Program, and other R&D programs.

The bill also includes $1.5 billion in emergency funds to help Western countries develop equipment that replaces Chinese telecom equipment suppliers Huawei and ZTE, and aims to accelerate the development of an open architecture model (OpenRAN) supported by US operators.

The President of the United States also supports this bill. He once called for an allocation of US$50 billion to promote semiconductor production and research. According to Reuters, US semiconductor production currently accounts for 12% of the world’s total, down from 37% in 1990.

Last month, Ford Motor Co. warned that a chip shortage may cut its production in the second quarter by half, causing it to lose about 2.5 billion U.S. dollars and about 1.1 million vehicles in 2021, while General Motors has extended its production by a few more due to the chip shortage. The shutdown time of the North American plant.

Japan intends to increase investment in chip and electric vehicle battery production

Nikkei reported that according to the draft growth blueprint to be finalized as early as June, the Japanese government will commit to expanding the existing 200 billion yen (about 1.84 billion U.S. dollars) fund size to support the domestic chip manufacturing industry and help raise funds. Vibrate the output of Advanced Semiconductor.

The plan will focus on promoting capital expenditures, such as inviting US manufacturers to invest in Japan to strengthen the chip supply chains of the two countries.

In the draft, the Japanese government will also promote large-scale investment in the development of electric vehicle batteries. The draft strategy calls for Japan to occupy 40% of the world’s share of next-generation power semiconductors used in electric vehicles and other applications within ten years.

The growth strategy is a key platform for the Japanese government to work hard to promote Japan’s long-term growth and competitiveness. The plan will highlight the Japanese government’s concerns about global chip supply shortages. The shortage of global chip supply has caused the output of Japanese automakers to be interrupted and may damage the Japanese economy, which is dependent on exports.

South Korea plans to invest about 450 billion US dollars in the next ten years, and Samsung’s US 5nm chip factory may start construction in Q3

South Korea is also increasing its chip industry investment and tax incentives. Including the world’s top two memory chip manufacturers Samsung and SK Hynix, the Korea Semiconductor Industry Association said that about 153 chip companies have planned to invest 510 trillion won (approximately US$453 billion) or more in the next ten years.

The South Korean government announced last week that it will provide 1 trillion won ($883 million) in long-term loans for the local chip industry to increase contract production capacity for 8-inch wafer chips and investment in materials and packaging.

Jinwook Burm, president of the Korean Society of Semiconductor Engineers, believes: “Establishing an environment where smaller fabless companies can thrive, with sufficient labor and foundry businesses, will naturally boost the system chip industry.” The plan will also increase the number of educated workers in the chip industry to 36,000 by 2030, more than double the previous 2019 target.

South Korea’s Ministry of Trade, Industry and Energy stated in a statement that South Korea will, from the second half of 2021 to 2024, reduce capital expenditure tax reductions for large companies engaged in semiconductors and other “key strategic technologies” from the current 3% or Lower, increase to 6%.

Chips are South Korea’s largest export product, accounting for about 20% of total exports. The South Korean President’s Office said in a statement that Samsung, Hyundai Motor, South Korea’s Ministry of Economic Affairs and industry associations all agreed on Thursday to join efforts to deal with the shortage of automotive chips, but did not provide details.

Samsung has also increased its own investment and announced that it will increase its investment plan for non-memory chips to 171 trillion won (151 billion US dollars) in 2030. It hopes to grow into the world’s largest logic chip manufacturer in the next ten years, The field challenges Taiwan Semiconductor Manufacturing Co., Ltd., and the US Qualcomm in the field of mobile processing chips.

Samsung also said in a statement that its third chip production line in Pyeongtaek, southern Seoul — the size of 25 football fields — will be completed in the second half of 2022.

According to another South Korean newspaper report, Samsung may start building a US chip factory with a planned investment of 17 billion US dollars in the third quarter of this year. It will use advanced 5nm extreme ultraviolet (EUV) lithography chip manufacturing processes, and the goal is to put it into operation in 2024. Samsung did not immediately comment.

Conclusion: Increasing investment has become the consensus of various countries to boost the chip industry

The bill promoted by the US Senate is part of the joint efforts of the two parties in the United States to cope with competition from other countries. Congressmen from both parties and the US president have repeatedly warned that the new crown pneumonia epidemic has caused a shortage of many products, highlighting the United States’ dependence on overseas manufacturing.

Schumer said that the United States must respond to the growing threat from China in many ways, especially the technology race. He said: “If we do not act boldly, we may lose a generation of high-paying jobs, thousands of high-paying jobs.”

Last Thursday, at Samsung’s chip factory in Pyeongtaek, South Korean President Moon Jae-in also said: “Countries around the world have entered the fierce competition by reorganizing their own supply chains.” “We need pre-emptive investment… to strengthen domestic industry Ecosystem construction, leading the global supply chain, let this opportunity become our opportunity.”


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