Trump Pressures Semiconductor Industry: “Firms Expanding U.S. Investment Exempt from Equity-for-Subsidy Requirement”

Commerce Department: “New Subsidy Framework — Firms Must Surrender Equity to Receive Funding”
TSMC and Micron, Having Announced Major Additional Investments, Fall Under Exemption Clause
Semiconductor Firms May Forgo Subsidies and Exit the U.S. Market

The Trump administration has announced that companies receiving subsidies under the CHIPS and Science Act of 2022 will be required to provide equity stakes to the U.S. government. However, firms that have significantly expanded their investments in the United States will be exempt from this requirement. As a result, Taiwan’s TSMC and U.S.-based Micron, both of which unveiled large-scale additional investments this year, will benefit from this exemption. In contrast, other companies such as Samsung Electronics, which have not announced further investments, face the prospect of having to cede equity stakes in exchange for subsidies.

U.S. Government Moves to Secure Stakes in Chipmakers Following Intel

On August 21 (local time), The Wall Street Journal cited senior administration officials as saying: “The Commerce Department will not require equity stakes from companies expanding their investments in the United States, but firms that fail to increase their commitments may have to provide shares in return for subsidies.” The report marks a concrete guideline just two days after the Trump administration first signaled its intent to secure equity stakes in semiconductor firms.

On August 19, Commerce Secretary Howard Lutnick declared that the government would begin acquiring stakes in subsidy recipients starting with Intel, sending shockwaves through the industry. Lutnick stated, “The Biden administration gave away money for free, but under Trump the policy is, ‘If you want funding, you must give us equity.’” This remark suggested that Samsung Electronics and others could also be targeted. According to Bloomberg, the administration is currently discussing acquiring a 10% stake in Intel.

By tying “additional investment” to exemption, however, the Trump administration offered breathing room for TSMC and Micron. In March, TSMC Chairman Mark Liu, after meeting President Trump at the White House, pledged an additional $100 billion on top of the previously announced $65 billion. In June, Micron committed more than $40 billion over six years to expand capacity and R&D at its Texas facilities.

TSMC Considered Renouncing Subsidies Amid Equity Demand

The contested subsidies, introduced under the Biden administration in December last year, were designed to be distributed on a sliding scale depending on the scale of U.S. investment, aimed at strengthening domestic production and global supply chain resilience. Allocations included $6.6 billion for TSMC, $6.2 billion for Micron, $4.75 billion for Samsung Electronics, and $458 million for SK Hynix. Yet disbursement stalled as decisions piled up late in Biden’s term.

The change of administration has abruptly shifted the landscape. The Trump administration has made clear it will reassess the entire subsidy framework. During his Senate confirmation hearing in January, then-nominee Lutnick said when asked whether he would honor subsidy contracts: “I cannot commit. I will not execute what I have not read.” The comment suggested that finalized agreements could be revisited from scratch, fueling industry uncertainty as the administration dragged its feet on disbursements.

If subsidy reductions materialize, chipmakers’ investment plans could face serious disruptions. High labor costs and strict environmental regulations already undermine profitability in U.S. manufacturing, making subsidies a de facto safeguard. For example, producing chips at TSMC’s Arizona fab is estimated to cost more than 30% above production in Taiwan. The company received a partial subsidy disbursement of $1.5 billion late last year when its first Arizona plant came online.

Still, TSMC has reportedly considered returning subsidies to block any U.S. equity participation outright. The company has signaled to Washington that “it has not heavily depended on U.S. support, and if equity is demanded, it may return the subsidies and withdraw from the U.S.” The Wall Street Journal noted that the exemption clause was likely introduced belatedly to avert such a scenario, as the withdrawal of the world’s largest foundry would jeopardize U.S. ambitions to expand domestic chip production.

Equity Participation Raises Risk of Profit-Sharing and Intervention

The Korean semiconductor industry now faces a complex calculus over subsidy allocations set under Biden, Trump’s push for equity participation, and scaling back of U.S. investment plans. Accepting not only subsidies but also government shareholding would mean sharing future profits with Washington and exposing companies to possible management interference. Samsung Electronics initially planned to invest $44 billion in its Taylor, Texas facilities but recently scaled that figure down to $37 billion.

Should the Trump administration enforce its equity-for-subsidy condition, Samsung would be expected to cede roughly 1.5% of its shares, given its market capitalization of about $300 billion. Chairman Lee Jae-yong had calculated that U.S. subsidies could offset rising costs from American operations, rendering the project viable. Without subsidies, however, profitability becomes questionable given high labor expenses, supply chain limitations, and technology transfer costs.

Nonetheless, some view U.S. equity participation more favorably. They argue that American shareholding could secure stronger government backing, smoothing local operations. Samsung has recently won large orders from Tesla, Apple, and other U.S. tech giants, underscoring tangible benefits from its American footprint. Analysts note that with geopolitical tensions intensifying across Northeast Asia, leveraging a strategic partnership with Washington to build a stable global supply chain may carry value that transcends near-term profitability.