US chip subsidy criteria could be a 'burden', says South Korea

SEOUL: Criteria to qualify for new United States semiconductor subsidies could be "burdensome" for companies such as Samsung Electronics and SK Hynix, South Korea's trade minister said on Thursday (Mar 30).

Conditions include sharing excess profit with the US government, and three industry sources said the application process itself could expose confidential corporate strategy.

Subsidies would come from a US$52 billion pool of research and manufacturing funds earmarked under the US' so-called CHIPS Act, for which the Commerce Department announced guides and templates this month.

SK Hynix parent SK Group plans to invest US$15 billion in the US chip sector, including to build an advanced chip packaging factory, and has said it is considering applying for funding. Samsung is building a chip plant in Texas that could cost more than US$25 billion and has said it is reviewing the guidelines.

However, funding applications may require detailed cost structure information as well as projected wafer yields, utilisation rates and price changes, which three Korean chip sources told Reuters was akin to revealing corporate strategy.

"All of this is confidential information. The most important thing in chips is cost structure. Experts will be able to tell our strategy at a glance," said one of the sources, who declined to be identified due to the sensitivity of the matter.

The US' subsidy provisions should reflect the opinions of the government and companies of South Korea so they do not impose any undue burden on those companies, South Korean Trade Minister Ahn Duk-geun said in a statement on Thursday.

Ahn's comment came from a meeting with US Trade Representative Katherine Tai in South Korea, a leading chipmaking country and major investor in the US chip sector.

The US Department of Commerce will accept subsidy applications for leading-edge chip facilities from Mar 31, and for current-generation, mature-node and back-end production facilities from Jun 26.

Taiwan Semiconductor Manufacturing, the world's largest contract chipmaker, which is investing US$40 billion in a new chip plant in Arizona, declined to comment on the US subsidies issue.