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Interface News Reporter | Liu Ting

In 2022, the current US President Joseph Biden successively issued the Chips and Science Act and the Inflation Reduction Act, introducing preferential policies such as tax credits, loans and subsidies totaling more than 400 billion US dollars to attract manufacturing represented by the new energy and semiconductor industries to return to the country. Two years later, this ambitious manufacturing repatriation plan does not seem to be going smoothly.

The Financial Times released an exclusive survey on Tuesday, saying that among the large projects worth more than US$100 million announced under the above two plans, nearly 40% of the projects were delayed or stopped. The reasons for the difficulty in implementing the projects include cost exceeding expectations, slowing demand, lack of policy details and uncertainty caused by the general election.

The Financial Times said that there are 114 large projects worth over 100 million US dollars related to the above bill, with a total investment of 227.9 billion US dollars, but the progress of projects with a total investment of about 84 billion US dollars has been delayed by two months to several years, and some projects have been suspended indefinitely. The report said that the newspaper's reporters came to the above conclusion after reviewing company press releases and documents and interviewing more than 100 companies and local governments.

These "difficult projects" include Italy's national power company Enel's $1 billion solar panel factory in Oklahoma, South Korea's LG Group's $2.3 billion battery plant in Arizona, and Albemarle, the world's largest lithium miner,'s $1.3 billion lithium refinery in South Carolina.

Before the Financial Times' survey was released, Tianfeng Securities pointed out in a research report in July this year that there are some signs that the "manufacturing repatriation" in the United States may not proceed smoothly as expected. For example, although the growth rate of equipment investment has rebounded when the "Chips and Science Act" and the "Inflation Reduction Act" were introduced, the overall growth rate remains at a low level; after the implementation of the two major bills, the manufacturing industry did return to the United States during the factory construction stage, but after entering the equipment investment stage, the speed of repatriation has slowed down; the machinery and equipment used in the production process rely more on imports, rather than meeting demand through domestic industrial equipment.

Tianfeng Securities pointed out that, in comparison, in the field of clean energy, the "manufacturing repatriation" of photovoltaics has progressed relatively smoothly, but the "repatriation" pace of the semiconductor industry has been relatively slow. This is mainly affected by two factors: one is whether the US government subsidies can continue, and the other is the gap in professional and skilled talents.

It’s not easy for companies to get U.S. government subsidies. While the Inflation Reduction Act’s tax credits were extended until 2032 and the Chips and Science Act provided generous funding to selected applicants, these subsidies are usually only available after companies meet specific goals.

The Financial Times pointed out that Integra Technologies, the largest outsourced semiconductor packaging and testing company in the United States, announced last year that it would build a $1.8 billion semiconductor factory in Bel Air, Kansas, but the project has not yet been advanced due to uncertainty in government funding. In addition, due to uncertainty in hydrogen tax credit policies, Norwegian electrolyzer manufacturer Nel Hydrogen has suspended a $400 million project in Michigan.

In addition, in the context of high interest rates, rising financing costs are also a reason why projects are difficult to implement in a timely manner. In response to inflation, the Federal Reserve has raised interest rates 11 times from March 2022 to July 2023, with a cumulative increase of 525 basis points, pushing the federal funds rate target to a high of 5.25%-5.50%, a record high since 2001. At the same time, inflation has also added pressure to projects that have just started. Since Biden took office as president in January 2021, US prices have risen by more than 20%.

"Everyone's costs are higher than expected because of labor and supply chain reasons," Craig McFarland, mayor of Casa Grande, Arizona, told the Financial Times. In March this year, Nikkei reported that five suppliers of TSMC and Intel delayed or scaled back their construction projects in Arizona due to rising construction costs and labor shortages.

Slowing market demand is another reason for the delay in project progress. For example, due to the decline in photovoltaic cell prices, solar panel manufacturers such as Maxeon, Heliene and Meyer Burger have postponed plans to build factories in the United States; affected by the slowdown in electric vehicle sales, South Korean auto parts manufacturer Samkee has postponed the construction of its factory in Alabama by 1-2 years.

Other projects are affected by political factors. For example, solar manufacturer VSK Energy canceled a planned $250 million investment in Brighton, Colorado, to protect the project from the possible rise of Republican presidential candidate Donald Trump. At a previous campaign rally, Trump made it clear that if he was re-elected as US president, he would repeal Biden's Inflation Reduction Act.

In response to this investigative report by the Financial Times, White House spokesperson Robin Patterson said that changes in project construction schedules are common. Under the Biden administration, U.S. manufacturing investment has hit record highs for six consecutive quarters, with 20,000 new construction jobs added each month this year.

Since Barack Obama, US presidents have included the reshoring of manufacturing in their policy agendas, but some US domestic institutions have long been skeptical about the extent to which "reshoring of manufacturing" can stimulate the economy. For example, in June this year, Scott Lincicome, vice president of the Herbert Stiefel Center for Trade Policy Studies at the Cato Institute, gave a speech to the Joint Economic Committee of Congress, saying that since the implementation of the Chips and Science Act and the Inflation Reduction Act, the total number of US manufacturing jobs, output, orders and capacity utilization have basically not changed.

He said that although industries such as semiconductors and transportation have performed well in recent months, at least so far, there has been no "manufacturing boom" in the United States. At the same time, he is worried that the United States may form a dual industrial economic structure, that is, large companies that receive government subsidies have a more optimistic development prospect, while smaller, unsupported domestic manufacturers have a more pessimistic outlook.

"There is good reason to doubt that solar, electric vehicles, semiconductors and other government-supported industries will not become efficient, innovative and globally competitive businesses in the years ahead," Lincicome said. In addition, subsidy policies could trigger trade protectionism, subsidy competitions with other countries and even trade disputes.