The Financial Times (FT) reported on the 16th (local time) that related investments in the U.S. have soared 20 times from three years ago since the Inflation Reduction Act (IRA) and the Semiconductor Support Act were implemented in the U.S. in August last year. The Joe Biden administration’s strategy to build a U.S.-centered supply chain in high-tech sectors such as semiconductors is working.
According to FT, companies’ investments in clean technology and semiconductor sectors such as electric vehicles, batteries, and renewable energy soared to $204 billion for about nine months from August last year to the 14th of this month. This is twice as much as 2021 and 20 times as much as 2019. In particular, there were only four investments worth more than $100 million in 2019, but after the IRA, there have been 31 so far. If the investment goes as planned, the number of new jobs created in the United States is estimated to be 82,000.
One-third of the new investment came from foreign-based companies such as Taiwan, Korea, and Japan. FT said, “LG, Hanwha, and Lonji (China), which are large Asian companies, announced new investment plans last month,” adding, “$40 billion in new announcements have been made this year alone.”
As the U.S. absorbs investment from major companies, opposition and concerns from allies are also followed. French President Emmanuel Macron recently visited China and said, “The IRA could divide the West,” and the European Union (EU) also unveiled its industrial support strategy to subsidize projects that are feared to move abroad in response to the IRA.
The IRA and the Semiconductor Support Act are bills aimed at reorganizing the supply chain of high-tech industries centered on China, focusing on the United States. The IRA includes a total of $369 billion in tax credits for clean technology, including subsidies for electric vehicles finally assembled in North America. The main goal of the Semiconductor Support Act is to provide a total of $52.7 billion over five years, including $39 billion in production subsidies and $13.2 billion in R&D subsidies, to semiconductor companies that establish factories in the U.S.
