CHIPS IMPACT
The CHIPS & Science Act was introduced to assist U.S. companies such as Intel and encourage dominant foreign players such as Taiwan Semiconductor Manufacturing Co., or TSMC, and South Korea’s Samsung Electronics Co. Ltd. to produce advanced chips in America.
The CHIPS Act includes $39 billion in grants and loans for the semiconductor industry to make smaller, advanced chips that are under greater demand than ever thanks to the rise of artificial-intelligence applications.
Most chips made in the U.S., including at Taylor’s Samsung Austin Semiconductor, are seven nanometers. The Taylor foundry, which is in the final stages of construction, is tasked with making four nanometer or two nanometer semiconductors.
Samsung was awarded a $4.4 billion grant from the U.S. Department of Commerce under the legislation, money that incentivizes continued expansion, research and innovation in Austin and Taylor. Originally it was more than $6 billion but was later modified.
It is unclear on how much of that grant, which releases funds as certain milestones are met, has been sent to Samsung.
Production at Samsung’s Taylor fab was originally slated for late 2024, but has since been pushed into late this year or 2026.
The press office for the Commerce Department division overseeing the CHIPS program did not respond to a request for comment.
Samsung Austin Semiconductor spokeswoman Michele Glaze said the company had no comment on the issue.
Trump’s decisions on many issues, often bucking conventional GOP platforms, has left industry observers unwilling to make predictions.
“You can’t really tell at any given point what he’s going to do,” said Claude Barfield, a senior fellow at the American Enterprise Institute. Barfield is an authority on international trade, science and technology policy and served in various government positions under presidents Ford, Carter and Reagan.
USING TARIFFS
Based on Trump’s talk on the campaign trail, speeches on inauguration day and executive actions in his first two weeks of office, the president seems intent on levying tariffs on goods coming from outside U.S. borders to fill government coffers and force the production of more U.S. goods.
The use of tariffs to force advanced semiconductor research and production on U.S. soil is unproven and is a shift in policy from Trump’s first presidency when he ordered his staff to begin negotiations with foreign semiconductor firms to build chip foundries in the U.S. for national security purposes.
Tariffs are not paid by the exporting company or the country where the manufacturing takes place, but rather by the U.S.-based importer, which passes on the additional cost to the consumer. Although it does bring in government revenue, analysts say it constitutes a hidden tax to U.S. consumers.
What’s more, past experiences with tariffs show domestic producers of goods also raise their prices for higher profits $
when costs for international competitors’ products rise due to government fees.
CARROT TO THE STICK
This switch from the carrot to the stick approach was first signaled in an interview with Austin-based podcaster Joe Rogan in late October.
During the three-hour session, thencandidate Trump said, “That chip deal is so bad. We put up billions of dollars for rich companies. You didn’t have to put up 10 cents. You tariff it so high that they will come and build their chip companies for nothing.”
Most of Trump’s ire was directed toward Taiwanese companies and no mention was made specifically of South Korea or Samsung, which has produced semiconductors in Austin for nearly three decades.
In the interview, Trump accused Taiwan of stealing the U.S.’s chip industry. The integrated electronic circuit placed on a single silicon chip was conceived in the late 1950s by Jack Kilby in Dallas at Texas Instruments, which had the first patent on the technology that laid the groundwork for the modern semiconductor.
The idea was simultaneously conceived by a team led by Robert Noyce, who became a cofounder in 1968 of Intel Corp., the largest benefactor of the CHIPS Acts grants with $7.5 billion at stake.
“When I see us paying a lot of money to have people build chips, that’s not the way,” Trump told Rogan.
While the grants awarded under the CHIPS Act will be paid out in tranches, it is unclear if any future freeze on grants could stop payments because presidents have been prohibited by law from impounding money that was already appropriated by Congress.
Although U.S. Sen. Ted Cruz, R-Texas, did not vote for the Biden-supported CHIPS Act, he has said he likes it after the action has spurred even more economic growth in the Lone Star State.
Cruz’s office did not respond to multiple requests for a statement on the president’s previous comments on the CHIPS Acts grants and what his reaction would be as the new chairman of the Senate Committee on Science, Commerce & Transportation.
However, in the months before Trump spoke on the CHIPS Act, Cruz pushed hard for environmental reviews that would let Samsung and other companies proceed with the fab-plant projects, which are using federal grants and tax credits to subsidize up to a quarter of the cost of building and equipping the foundries.
In April 2024, Cruz commended Samsung for securing federal funding for the Taylor and Austin facilities, which he said are “expected to create over 20,000 jobs in the area.”
Cruz was pushing the U.S. House of Representatives to approve his Senate bill “to streamline federal environmental reviews for the construction of semiconductor plants across Texas and the nation,” according to Cruz’s statement.
Highlighting the Taylor plant’s importance to the country, Cruz touted his leadership in getting Samsung approved through the National Defense Authorization Act.
IMPORTANCE TO THE AREA
Samsung has billions of dollars in preapproved tax breaks for future expansion to the Taylor campus in the coming decades from Williamson County, Taylor and the Taylor Independent School District.
The importance of the semiconductor industry to the region is massive. Not only will it create tens of thousands of jobs, but money from Samsung and other companies is circulating through the economy in numerous ways including housing, retail and commercial construction.
In addition, new homegrown and chain businesses are coming to the area. Millions of dollars also are invested in education to support the industry from the companies and from state government.
Roger Bonnecaze, dean of the University of Texas at Austin Cockrell School of Engineering, said the relationship between academia, Samsung and the state has been beneficial for Texans.
The school recently added a master’s degree in semiconductor manufacturing and engineering, something that wouldn’t have happened without the funding and support of Samsung, he said.
Applications have opened for the fall and Samsung is supporting at least a dozen scholarships for the 25 to 30 students expected for the first class, he said.
Bonnecaze said the millions of dollars pumped into the UT system and beyond by Samsung ripples through the Texas economy.
“The semiconductor industry in Texas needs UT, and Texas A&M and other universities to fill the pipeline,” he said.
Several universities across the state have received scholarships and research grants from Samsung over the last two years. It also has prompted a nonprofit to donate 68 acres for a new University of Texas campus next to Taylor High School to attract higher education to Taylor.
“We are still trying to figure out how best to use this generous gift,” Bonnecaze said of the future Taylor campus, adding it will create a closer interaction with Samsung and an opportunity to do ongoing training for existing employees at the company and its suppliers, not just in engineering but also in related technology jobs and trades.
Besides employment at Samsung, the semiconductor industry and other businesses it attracts will create jobs with suppliers and encourage startup firms that could go on to employ many more in Central Texas in manufacturing and the sciences.
“This is a great win for Texas,” Bonnecaze said.
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