Trump’s possible equity-for-subsidy demand shakes Samsung, incites governance concerns

The White House’s apparent bid to take an equity stake in Samsung Electronics in exchange for subsidies has rattled the chip giant and Korea Inc., raising fears that the unprecedented maneuver could potentially open the door to oversight of management or ripple across other exporters.

The proposal, floated by the Donald Trump administration, has drawn sharp criticism from domestic experts, who warn it could act as a pretext to avoid delivering on subsidy promises and disadvantage non-U.S. firms. The concern is particularly acute for Samsung and SK hynix, which, together, have pledged $40.87 billion for semiconductor plants in the United States on the expectation of receiving grants committed under the Biden administration.

Samsung is committing $37 billion to its new chip complex in Taylor, Texas, which will house two advanced foundries for 4-nanometer and 2-nanometer production alongside a center for research and development. That investment has already ballooned from the initial $17 billion plan, supported in part by U.S. incentives. Last December, the U.S. Commerce Department awarded Samsung $4.745 billion in subsidies.

If those funds were instead converted to equity, the U.S. government would effectively own about 1.6 percent of Samsung’s market capitalization, valued at 417.3 trillion won as of August 20.

White House press secretary Karoline Leavitt confirmed on August 19 that U.S. Commerce Secretary Howard Lutnick is negotiating a deal with Intel that would grant the U.S. government a 10 percent nonvoting stake in return for $7.9 billion in CHIPS Act funding. Lutnick told CNBC that the administration seeks a return on its “investment” rather than “just giving the grants away.” He emphasized that the stake would carry no governance rights, framing it as a conversion of Biden-era grants into equity “for the American people.”

While the plan is presented as part of Trump’s push to revive the U.S. foundry business through Intel, extending the same approach to foreign firms carries a different set of implications. Reuters reported on August 19 that Lutnick is eyeing a similar model for other chipmakers, explicitly naming Samsung as a potential candidate. The Commerce Department controls the $52.7 billion in CHIPS Act funds and has the authority to shift terms.

Samsung declined to comment on the matter.

Such a shift would mark a dramatic departure from precedent. The U.S. government has rarely purchased equity in foreign-listed companies, and any stake in Samsung would likely require approval from the Korean government, which could move to block it. A more plausible option, some experts suggest, would be for Washington to seek ownership stakes in Samsung’s U.S. subsidiaries, such as its Austin and Taylor plants.

Even so, analysts argue that Samsung has little incentive to accept the offer, blaming the United States for going back on an initial promise.

“If the U.S. government takes an equity stake, it may provide a short-term psychological boost for Samsung’s stock,” said Noh Geun-chang, executive director of Hyundai Motor Securities. “But in the long term, if Samsung Foundry performs well, the fact that part of its equity is held by the U.S. government could be viewed negatively. Replacing free subsidies with equity fundamentally changes the nature of the agreement and injects significant uncertainty.”

Experts also caution that rejecting the arrangement carries its own risks.

“Samsung or SK hynix have little incentive to accept such an offer,” said Kim Yang-paeng, senior researcher at the Korea Institute for Industrial Economics & Trade. “But if they refuse, the U.S. could claim it honored its subsidy pledge and that foreign firms declined — absolving Washington of any obligation to pay out. The maneuver would allow U.S. chipmakers to secure the set-aside funds while sidelining foreign players, reinforcing perceptions of discriminatory industrial policy.”

The stakes are high for Samsung, which is racing to expand its U.S. footprint amid intensifying competition with TSMC and rising geopolitical tension over semiconductor supply chains. The prospect of Washington turning subsidies into equity introduces a new layer of unpredictability to its multibillion-dollar investment, raising the risk that support long promised under the CHIPS Act could morph into a form of paid participation.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]