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<President Joe Biden holds up a semiconductor wafer during a semiconductor videoconference held at the White House in Washington, D.C. on April 12 (local time).>

The U.S. is expected to drastically strengthen financial support to encourage the establishment of semiconductor factories in the country,through'CHIPS for America Act'. This will include 'Incentives' such as tax exemption benefits for foreign semiconductor manufacturers that have entered the U.S.market. As the size and timing of investment specify according to the U.S. government's incentives, how Korean companies will respond is drawing attention. 
The White House's review report for the improvement of semiconductor and battery supply chain, announced on the 8th (local time), stated in a policy recommendation that the U.S. Congress should establish measures toprovide financial support of at least $50 billion (about 55.65 trillion won) for semiconductor production and R&D.
The Chips Act includes strong support measures such as $10 billion in federal subsidies and up to 40% tax creditsfor establishing semiconductor factories in the United States. If an additional $50 billion is provided according to this policy recommendation, the subsidy and tax credit amount could be much greater. 
Although the U.S. Senate has passed the 'American Innovation Competitiveness Act', which is to spend $54 billion (60 trillion won) over the next five years for developing innovative technology such as semiconductors, but the Senate has not yet materialized a bill to provide $50 billion in the Chips Act.
The report raised the need to provide incentives especially to semiconductor facilities, fab construction, expansion, and modernization. Also referring to the $17 billion investment of Samsung Electronics, the report emphasized that "the U.S. government will strengthen our relationship with our alliances and partners to realize fair allocation of semiconductor chips, increase production, and promote investment.”The report stressed  cooperation with allies, mentioning South Korea 74 times.
As the core policy recommendations state the expansion of financial support through the Chips Act and strengthening cooperation with allies, attention is drawn to whether the incentives will increase for Korean semiconductor manufacturers that have entered or are preparing to enter the US market. 
An industry official said on June 10, "Semiconductor companies that have subsidiaries in the U.S. are paying attention to changes in U.S. government policy and are considering ways to benefit, such as incentives. They will respond much faster after the release of this review report.”
Samsung Electronics demanded a tax reduction of 900 billion won for up to 20 years in exchange for investing 19 trillion won in a semiconductor plant expansion in Austin, Texas. In response,Austin has reportedly proposed a tax benefit of 720 billion won over 10 years. Samsung Electronics is looking for other areas, including Austin, as candidate cities for expansion. Their investment decision is likely to heavily depend on the tax benefits.
Vice Chairman Cheol-seong Hwang of the Institute of Semiconductor Engineers (Chair Professor of Seoul National University)said "There are many challenging areas for companies to directly address, such as semiconductor water and power supply, management of residents in investment areas, and tax benefits. Expanding the funds for the Chips Act will easily solve these problems in the short term, helping our semiconductor companies enter the U.S.” Vice Chairman Hwang added, “However, since the state and federal government support are separate, companies will have to consider the size and method of benefits on their own.”
Seok-gu Kang, Head of the International Division of the Korea Chamber of Commerce and Industry, said, “I don’t think there would be discriminated tax benefits between our firms that entered the U.S. market and American companies. In this regard, there are advantages to semiconductor companies investing in the U.S. market.”
However, since the U.S. government wants to improve the ecosystem by nurturing its own companies, it is highly likely that R&D support will be provided to US companies. The internalization of semiconductor technology and enhancement of competitiveness in the U.S. may pose a long-term threat to Korean companies.
Showing caution, he added, “The U.S. will focus on nurturing the capability of its own companies in improving supply chains such as semiconductors. Our companies should also be prepared to respond to many parts such as technology differentiation in the near future.”
By Staff Reporter Dong-jun Kwon (djkwon@etnews.com)