And now we cannot count on an increase in subsidies from the US authorities.
President Joseph Biden, after coming to power in the United States, announced a number of initiatives aimed at developing the national semiconductor industry and local production of electric vehicles. South Korean companies have succumbed to the temptation to localize production in the United States, but as The Korea Times explains, they are now faced with rising costs for the construction of their enterprises, and a proportional increase in subsidies from the US authorities is not yet available to them.
Image source: AP-Yonhap
At least, Samsung Electronics spent $8 billion out of the planned $17 billion just on the construction of its plant in Texas, which should begin producing 4nm chips next year, and a considerable part of the budget will be required for the purchase and installation of technological equipment.
Overall, the cost of construction work in the United States has risen by a third over the previous three years, according to official statistics. In addition to the cost of construction materials, rising labor costs in the United States also contributed to this. LG Energy Solution, having soberly assessed the situation with demand in the US electric vehicle market, changed its mind about building a fourth plant for the production of traction batteries in Indiana, which it planned to operate jointly with General Motors.
The Korean SK On implemented its projects for the construction of enterprises for the production of traction batteries in the states of Kentucky and Tennessee in collaboration with Ford Motor, but the fate of one of them is now in question, since so far the partners have enough of one enterprise in Kentucky to meet the existing demand for electric vehicles. At the same time, SK On's operating losses continue to grow, and Korean companies in general are cautiously awaiting the fall, when the US presidential elections will take place. If Donald Trump returns to power, the experience of his first term does not bode well for foreign investors. For now, Korean manufacturers are determined to lobby their interests through the Korean government, which is negotiating in the United States to increase subsidies taking into account current realities.