Challenges Faced by Foreign Tech Giants in the U.S.

Manufacturing Incentives

Washington’s promises of incentives for domestic manufacturing through the CHIPS Act and the Inflation Reduction Act have attracted foreign giants like Taiwan Semiconductor Manufacturing Company, Samsung, and LG to invest in the U.S. However, these companies are now concerned about high costs and uncertainty about subsidies.

Samsung’s Texas Plant

Samsung Electronics, the world’s biggest memory chipmaker, announced plans to build a new advanced chipmaking plant in Texas with a budget of $17 billion. However, construction costs soared by over $8 billion due to inflation, as reported by Reuters in March.

Financial Burden

An official from a South Korean chipmaker expressed concerns about the growing financial burden posed by U.S. investment plans. The unexpected rise in labor and construction costs has added to the challenges.

Project Delays

TSMC’s projects in Arizona are facing delays, with operations expected to start later than initially forecasted. Talks with the U.S. government regarding incentives and tax credits are still ongoing.

Smooth Operations in Japan

TSMC’s project in Japan, backed by government support, is progressing smoothly. The company plans to start production as scheduled and has announced intentions to build a second plant in the country.

Impacts of the Inflation Reduction Act

The Inflation Reduction Act, aimed at attracting more production to the U.S., may not be sufficient to offset rising costs and macroeconomic uncertainty affecting clean energy-related manufacturing.

Investment Reassessments

South Korean firms, including SK On and LG Energy Solutions, are slowing down and reevaluating their investments in the U.S. due to various challenges and uncertainties.

Industry Concerns

Automakers like Ford and General Motors are cautious about the pace of EV adoption due to potential barriers in accessing tax credits and rising interest rates. Political risks ahead of the U.S. presidential election also add to the concerns.

Conclusion

As foreign tech giants navigate challenges in the U.S. market, uncertainties around costs, incentives, and policy changes continue to impact their investments and operations.

Update: March 14, 2023. This article has been updated with a statement from Samsung.

Read More of this Story at fortune.com – 2024-03-14 16:22:15

Concerns about high costs of U.S. projects raised by Samsung, TSMC, and other companies