Samsung Electronics has been awarded a $4.745 billion incentive by the US government to help boost operations and create "tens of thousands" of jobs at its production hubs in America, as the world's biggest economy positions itself to be a leader in the microchip industry amid the artificial intelligence boom.
The incentive, which was made under the key Chips Act, will underpin Samsung's investment commitment of more than $37 billion in the coming years and help transform its existing presence into a "comprehensive ecosystem for the development and production of leading-edge chips" in the US, the Commerce Department said on Friday.
These will include two new logic fabrication plants and a research and development unit in Taylor, Texas, in addition to expanding an existing facility in Austin, according to the department, which will distribute the funds based on Samsung’s completion of project milestones.
“With this investment in Samsung, the US is now officially the only country on the planet that is home to all five leading-edge semiconductor manufacturers," Commerce Secretary Gina Raimondo said in the statement.
Based on market capitalisation, that list would include AI leader Nvidia, Broadcom, Taiwan Semiconductor Manufacturing, Samsung and Advanced Micro Devices, according to data from CompaniesMarketCap.
"This is an extraordinary achievement, which will ensure we have a steady, domestic supply of the most advanced semiconductors that are essential to AI and national security, while also creating tens of thousands of good-paying jobs and transforming communities across the country,” Ms Raimondo said.
US companies Texas Instruments, the seventh-biggest by market cap, and Amkor Technology were also awarded incentives, being granted with $1.61 billion and $407 million, respectively. They will also be disbursed according to milestones, the department said in separate statements.
The incentive for Texas Instruments will support more than $18 billion worth of investments through the end of the decade that includes the construction of three new plants. Amkor's, on the other hand, will aid a $2 billion greenfield facility, in addition to the creation of up to 4,000 jobs.
“The manufacture of leading-edge semiconductors is a critical part of the supply chain for advanced AI and other leading technologies,” National Economic Advisor Lael Brainard said.
The race for semiconductor manufacturing continues to heat up as companies try to keep up with the heightened demand for chips, particularly to power AI applications amid the explosion of generative AI. The US is positioning itself to take a leading role in the industry and fend off challenges particularly from China.
The Chips Act – officially the Creating Helpful Incentives to Produce Semiconductors and Science Act – was enforced in 2022 to boost and incentivise US chip production.
It also aims to help revitalise the US semiconductor sector, once a major force but has since lost market share to other manufacturers including those based in South Korea and Taiwan.
The share of modern semiconductor manufacturing capacity located in the US has eroded from 37 per cent in 1990 to 10 per cent in 2022, mostly because other countries’ governments have invested "ambitiously in chip manufacturing incentives and the US government has not", according to the Semiconductor Industry Association.
"Federal investments in chip research have held flat as a share of GDP, while other countries have significantly ramped up research investments," the Washington, DC-based trade body said.
The Chips Act has so far awarded approximately $32 billion of the more than $36 billion earmarked for incentives across 21 states that are expected to create over 125,000 jobs, according to the Commerce Department.
In addition, semiconductor and electronics companies have announced almost $450 billion in private investments since the beginning of the Biden administration in 2021, enabling to "stimulate private sector investment, create good-paying jobs [and] make more in the US", it added.
LILO & STITCH
Starring: Sydney Elizebeth Agudong, Maia Kealoha, Chris Sanders
Director: Dean Fleischer Camp
Rating: 4.5/5
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Who is Mohammed Al Halbousi?
The new speaker of Iraq’s parliament Mohammed Al Halbousi is the youngest person ever to serve in the role.
The 37-year-old was born in Al Garmah in Anbar and studied civil engineering in Baghdad before going into business. His development company Al Hadeed undertook reconstruction contracts rebuilding parts of Fallujah’s infrastructure.
He entered parliament in 2014 and served as a member of the human rights and finance committees until 2017. In August last year he was appointed governor of Anbar, a role in which he has struggled to secure funding to provide services in the war-damaged province and to secure the withdrawal of Shia militias. He relinquished the post when he was sworn in as a member of parliament on September 3.
He is a member of the Al Hal Sunni-based political party and the Sunni-led Coalition of Iraqi Forces, which is Iraq’s largest Sunni alliance with 37 seats from the May 12 election.
He maintains good relations with former Prime Minister Nouri Al Maliki’s State of Law Coaliton, Hadi Al Amiri’s Badr Organisation and Iranian officials.
Tips on buying property during a pandemic
Islay Robinson, group chief executive of mortgage broker Enness Global, offers his advice on buying property in today's market.
While many have been quick to call a market collapse, this simply isn’t what we’re seeing on the ground. Many pockets of the global property market, including London and the UAE, continue to be compelling locations to invest in real estate.
While an air of uncertainty remains, the outlook is far better than anyone could have predicted. However, it is still important to consider the wider threat posed by Covid-19 when buying bricks and mortar.
Anything with outside space, gardens and private entrances is a must and these property features will see your investment keep its value should the pandemic drag on. In contrast, flats and particularly high-rise developments are falling in popularity and investors should avoid them at all costs.
Attractive investment property can be hard to find amid strong demand and heightened buyer activity. When you do find one, be prepared to move hard and fast to secure it. If you have your finances in order, this shouldn’t be an issue.
Lenders continue to lend and rates remain at an all-time low, so utilise this. There is no point in tying up cash when you can keep this liquidity to maximise other opportunities.
Keep your head and, as always when investing, take the long-term view. External factors such as coronavirus or Brexit will present challenges in the short-term, but the long-term outlook remains strong.
Finally, keep an eye on your currency. Whenever currency fluctuations favour foreign buyers, you can bet that demand will increase, as they act to secure what is essentially a discounted property.
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Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
