While the U.S. government is willing to help semiconductor companies to build new fabs in the country, it sets rather strict requirements for those getting funding under the CHIPS and Science act. But South Korean chipmakers are dismayed by the requirement of submitting detailed information about fab capacity and even expected yields, among other things. They consider these requirements a threat to their trade secrets, reports Business Korea.

As part of the application process for subsidies, the U.S. Department of Commerce demands companies to submit such details as projected fab production capacity by wafer type, utilization rate, expected wafer yield, initial selling prices, production volumes for each year, and projected price changes. Companies asking for subsidies must also submit profitability indicators such as projected cash flows in Excel files to validate their calculation methods. 

The formal reason for requiring this data is to enforce the policy of confiscating excess profits earned by companies beyond the expected amount. But metrics like utilization rates and yields are critical indicators of a chipmaker’s competitiveness and therefore are regarded as trade secrets. Furthermore, yield rates not only demonstrate technological prowess (or lack of it) but also reveal unit costs. For memory makers, unit costs are key metrics of effectiveness. For foundries, unit costs are not only their trade secrets, but the trade secrets of their fabless customers. 

While the U.S. DoC officially guarantees that trade secrets will not be disclosed to any third party, South Korean companies have their reasons to be concerned. Leaking these critical trade secrets to U.S. companies like Intel could cause severe harm to Samsung Electronics and SK Hynix. Furthermore, taking into account excess profit sharing, labor union obligations, and restrictions on semiconductor investments in China, Korean enterprises might not earn any benefits from the U.S. subsidy initiatives, and may even end up losing more than they gain.  

As a result, Korean firms eligible for subsidies are hesitant to apply, according to the report. Meanwhile, industry experts questioned by BusinessKorea believe that Korean companies have no option but to apply for subsidies due to rising inflation and increasing commodity prices, which drive investment requirements. Furthermore, South Korea’s relationship with the United States may also have an influence on their decision. 

Samsung Foundry is currently building its new EUV-capable fab near Taylor, Texas. The company originally intended to invest $17 billion, though it is likely that its investment requirements will rise due to inflation and rising costs. The fab is projected to start production in H2 2024 and make chips on the company’s 3nm and 4nm-class nodes. The company is also mulling building a massive fab complex that might require interments of $192 billion, though it is unclear whether any formal decisions have been made.

SK Hynix will likely not build a memory production fab in America, but it intends to construct a cutting-edge packaging facility in the U.S. that is eligible for the CHIPS subsidies.

“The U.S. government’s demands may be excessive, but the United States has the original technologies for semiconductors, including those for extreme ultraviolet lithography equipment,” said Kyung Hee-Kwon, an associate researcher at the Korea Institute of Industrial Economics, in a conversation with BusinessKorea. “Some high-tech U.S. industries and high-level U.S. workers are also needed for Samsung Electronics’ growth in the non-memory sector, so I think Samsung Electronics will apply for the semiconductor subsidies.”