Global Media Focus | Japanese Media: US Subsidy Bill Failed to Promote the Development of Related Industries
2024-08-17
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This article is reproduced from [CGTN Global Information Broadcast];
In August 2022, US President Biden signed the Chips and Science Act and the Inflation Reduction Act in succession, hoping to promote the development of related industries in the United States. Two years later, what are the effects of the two bills?
A recent commentary on the Nikkei Asian Review website pointed out that the two bills plan to allocate about $500 billion to the electric vehicle, renewable energy and semiconductor industries to support the development of related industries in the United States. However, in the past two years, the United States still faces challenges in getting projects into the actual production stage and reducing the dependence of the supply chain on China.
Screenshot of the report on the Nikkei Review website
The article stated that, stimulated by huge subsidies, many American and foreign companies announced plans to increase production in the United States. According to the Peterson Institute for International Economics, as of May this year, a total of $382 billion in investment has been announced, of which about 70% was invested in the chip industry, and the rest was invested in electric vehicles and renewable energy.
However, a considerable number of these investment plans have either been postponed, reduced in amount or even stopped.
For example, Ford Motor has reduced the size of its planned power battery factory in Michigan and postponed the official start of production of its electric vehicle factory in Tennessee. South Korea's LG Group has stopped construction of a battery factory in Arizona. In the chip field, TSMC has postponed the completion of its second factory in Arizona from 2026 to 2027 or 2028. Intel's new factory in Ohio that meets the subsidy conditions is also facing delay challenges.
The article states that the Biden administration hopes that these subsidies will foster the market and provide more jobs, but the reality is that these goals have not been achieved in many cases. Electric vehicle sales in the United States are slowing, dragging down profits of automakers such as Tesla, and expansion plans are also faltering due to competition with China's cost-effective models. At the same time, the semiconductor industry is also hampered by a shortage of engineers and other talents.
According to the Financial Times, about 40% of major investments announced within a year of the enactment of the two bills have been postponed or suspended. And as plans of large companies stagnate, the goal of getting rid of dependence on China in the supply chain may also be forced to be postponed.
Screenshot of the Financial Times report
Data from the U.S. Department of Commerce show that in the first half of this year, the United States imported about $6.2 billion worth of batteries from China, a 40% increase from 2022 and a six-fold increase from three years ago. Even after the passage of the Inflation Reduction Act, related imports from China continued to increase.
In terms of solar panels, Chinese products are beginning to enter the United States indirectly through Southeast Asia. Weak U.S. solar panel production has forced it to rely on imports. Direct imports from China have decreased due to high tariffs, but imports from ASEAN member countries have increased significantly, accounting for 80% of imports in June.
Many people believe that these two bills are not enough to free the United States from its dependence on China in the supply chain.
Alan Swan, president of Panasonic Energy North America, said China is 10 years ahead in building a supply chain including battery components and raw materials, and it will be difficult to catch up. The company has partially delayed plans to build a new battery factory in the United States.
China still has an overwhelming share of the global market for battery materials such as graphite and lithium.
In the semiconductor sector, most of the support provided by the Chips and Science Act is for large factories of major companies such as Intel, TSMC and Samsung Electronics. Many people believe that some companies that are critical to production, such as those related to materials and manufacturing equipment, have not received enough support.
Compiled by Zhu Wanling
