With the arrival of Trump 2.0, Taiwan’s chip industry is set for upheaval. technology

Taipei, Taiwan – With just weeks left in office, outgoing United States President Joe Biden and his team are scrambling to secure billions of dollars in funding to restart chip manufacturing in the US.

Signed into law by Biden in 2022, the CHIPS and Science Act sets aside $280bn in funding to boost domestic semiconductor research and manufacturing in the US, including $39bn in subsidies, loans and tax credits for both US and foreign companies Were included.

The legislation received bipartisan support in Congress and was widely welcomed in both Democratic and Republican-leaning states looking to lure state-of-the-art manufacturing facilities and create jobs.

But with President-elect Donald Trump taking office on January 20, the future of the CHIPS Act now looks uncertain, leaving Biden’s administration racing to complete complex negotiations with chip makers and distribute the funds.

During an appearance on the Joe Rogan Experience podcast shortly before the election, Trump described the law as “very bad”.

“We have given billions of dollars to rich companies,” Trump said.

Trump has also accused places like Taiwan, the world’s top producer of advanced semiconductors, Taiwan Semiconductor Manufacturing Company (TSMC) of “stealing” the chip industry from the US.

Most of the 24 recipients of funding under the CHIPS Act are US companies, the leader of which is Intel, which received nearly $7.9 billion in direct funding from the US Commerce Department last month.

Four East Asian companies have also signed the CHIPS Act: Taiwan’s TSMC and GlobalWafers, and South Korea’s Samsung and SK Hynix.

In recent weeks, the Commerce Department has finalized its deals with TSMC and GlobalWafers, after previously signing a non-binding memorandum of agreement.

TSMC secured a $6.6 billion grant and a $5 billion loan to build four facilities in Arizona, while GlobalWafers finalized a deal to receive $406 million to build facilities in Missouri and Texas.

Trump cannot unilaterally repeal the CHIPS Act because it was passed by the US Congress, but analysts say he could make it difficult for the law to work as intended.

As president, he could block or delay the Commerce Department in distributing the funds, possibly as part of cost-cutting efforts being led by the new so-called Department of Government Efficiency, led by tech mogul Elon Musk and entrepreneur Vivek Ramaswamy. In.

Dan Hutchison, vice president of California-based Tech Insights, said Trump may try to renegotiate some of the terms of the CHIPS Act or reimplement elements of it under the new law.

Hutchison said Trump made a similar move in 2018, signing the U.S.-Mexico-Canada Agreement to replace the largely similar North American Free Trade Agreement.

The Trump administration borrowed heavily from the wording of NAFTA and the Trans-Pacific Partnership, a free trade agreement with Asia proposed by former President Barack Obama, for the revised agreement.

“(Trump) really wants to get his brand on everything… and you can see it with all his hotels and resorts and everything else,” Hutchison told Al Jazeera.

“That’s their typical modus operandi, which I think you can expect will happen with the CHIPS Act.”

Among CHIPS Act’s Asian partners, Taiwan’s TSMC has made the most efforts to increase US investment.

After previously signing a non-binding memorandum of agreement, the Taiwanese company last month agreed to a $6.6 billion grant and a $5 billion loan to build four semiconductor fabrication plants in Arizona.

Other Asian companies have moved less quickly because of delays over the past two years and their own business challenges, according to Chim Lee, senior analyst for China and Asia at the Economist Intelligence Unit.

In April, Samsung signed a non-binding agreement to spend $45 billion to expand its production facilities in Texas in exchange for a $6.4 billion grant.

Even after eight months, no progress has been announced on the agreement.

In October, the South Korean tech giant issued a rare public apology after posting disappointing third-quarter results, blaming competition from its Chinese rivals.

There was no further update on the status of non-binding agreements announced in April and July by SK Hynix to build a $3.87 billion facility in Indiana and by Global Wafers to invest $4 billion in the production of silicon wafers in Texas and Missouri, respectively. Has gone.

Yachi Chiang, a technical law professor at National Taiwan Ocean University, said many in Taiwan think the Trump administration will ask TSMC to invest more than the $65 billion it gave it to build three Arizona plants in exchange for U.S. subsidies.

With the change in administration, companies may be less eager to pursue negotiations, said EIU’s Lee.

“The reconsideration may delay the distribution of funds, if not dilute some of it. It has already taken more than two years for the allocation (of funds) after the Bill was passed. Businesses don’t like to wait, and they don’t like uncertainty,” he told Al Jazeera.

“Of course, it goes both ways. “For some companies, producing in the US is so expensive that they will not commit to investment unless there are strong incentives.”

Tech companies in Asia have other incentives to keep production close to home.

South Korea and Taiwan enacted their own counterparts to the CHIPS Act last year to boost subsidies and tax breaks for companies investing locally.

Japan approved $3.9 billion in subsidies to domestic chipmaker Rapidus earlier this year, and Tokyo aims to spend $65 billion through public and private sector financing to catch up with its chip-making neighbors. Have to do.

Meanwhile, China recently pledged $45 billion to boost its chip industry in the wake of US export controls and other efforts to curb the acquisition of advanced technology.

Taiwan’s Ministry of Economic Affairs told Al Jazeera it would not be appropriate to comment on the CHIPS Act before Trump takes office.

However, Taipei has signaled to Trump that it is listening to his concerns.

Shortly after Trump’s election victory, The Financial Times reported that Taiwan was considering a $15 billion arms purchase deal to show the President-elect that it could defend itself following criticism of him spending more on its military. Is “serious” about.

At the same time, there is political gridlock across East Asia, creating uncertainty over how governments will respond to the Trump administration and its economic demands.

While Taiwan President William Lai Ching-tey can join Trump as head of state, he is hampered from a domestic policy standpoint by the opposition, which holds a majority in the legislature.

In South Korea, Han Dak-soo is serving as an acting leader as the country’s constitutional court considers whether to remove Yoon Suk-yeol from office after impeaching him over a short-term declaration of martial law. No.

In Japan, Prime Minister Shigeru Ishiba is leading a minority government after his Liberal Democratic Party lost its majority in parliament following a snap election in October.

A second election for the upper house of Japan’s parliament is scheduled for next year, raising fears of further uncertainty.

William Reinsch, senior adviser to the economics program at the Center for Strategic and International Studies, said the CHIPS Act was one of several issues on the minds of East Asia leaders.

“I would hope that Korea, Taiwan and Japan would look at the bigger picture of maintaining good relations with the US rather than just focusing on the CHIPS Act,” Reinsch told Al Jazeera.

“You should expect them to think seriously about investing more in the US, spending more money on their own defense budget, and thinking about how to align themselves with US policy regarding China.”