Samsung to Build 17 Billion Chip Factory

Samsung to Build 17 Billion Chip Factory

Samsung to Build $17 Billion Chip Factory

Samsung announced plans to construct a $17 billion semiconductor facility near Austin, Texas, in response to a worldwide scarcity of chips used in smartphones, automobiles, and other electronic gadgets. Samsung to Build 17 Billion Chip Factory

“This is the greatest foreign direct investment in the history of the state of Texas,” Texas Gov. Greg Abbott said Tuesday as he announced the project.

Samsung said that it would begin construction on the Texas factory next year with the goal of starting operations in the second half of 2024. Samsung Vice Chairman Kinam Kim, standing with the Republican governor, said the South Korean electronics giant picked the location based on a variety of considerations, including government incentives and the “readiness and stability” of local infrastructure. Samsung to Build 17 Billion Chip Factory

The chip scarcity has emerged as both an economic impediment and a severe national security worry for the United States. For more than a year, shortages of semiconductors caused by COVID-era shutdowns have impeded the manufacture of new automobiles and electrical gadgets. New economic and national security concerns arise as a result of the reliance on chips manufactured elsewhere, notably in Taiwan, which China has long claimed as its own territory.

“It’s a concentration risk, a geopolitical risk” to rely on Taiwan for the majority of the world’s semiconductor manufacturing, according to Nina Turner, an IDC research analyst. She said that although the present shortages would likely diminish, there will continue to be a long-term need for chips as an increasing number of common items depend on them. Samsung to Build 17 Billion Chip Factory

Samsung to Build 17 Billion Chip Factory

Numerous chipmakers are expanding their production facilities in response to the shortages, which have impacted industries ranging from automotive to video games.

“It makes sense for the supply chain to be geographically more diverse,” said Angelo Zino, a CFRA analyst. “Clearly, you’re seeing some additional foundry capacity plans announced in the United States and Europe.”

Zino added that another factor is the expectation that Congress will approve federal subsidies for the semiconductor industry to build factories in the United States, in the hope of creating jobs, alleviating future supply concerns, and providing the United States with more leverage over economic rivals such as China. Samsung to Build $17 Billion Chip Factory

Samsung to Build 17 Billion Chip Factory

Samsung to Build $17 Billion Chip Factory

Samsung has previously said that it was looking at locations in Texas, Arizona, and New York for a potential new chip production in the United States. Since the late 1990s, it has operated a chip manufacturing facility in Austin, Texas. However, the majority of its production facilities are located in Asia.

Samsung has said that it aims to invest $17 billion in the Texas project, making it the company’s biggest investment in the United States. The company said that the new facility would increase manufacturing of sophisticated chips used in 5G mobile communications, advanced computing, and artificial intelligence, as well as strengthen supply chain resilience. Samsung to Build 17 Billion Chip Factory

According to the Semiconductor Industry Association, a trade organization, the United States’ share of the global chip manufacturing industry has decreased from 37% in 1990 to 12% now. The Biden administration has pushed Congress to enact the $52 billion CHIPS Act, which aims to boost computer chip production and research. Separate legislation is also being considered that would provide a new tax credit for semiconductor manufacturing facility investment.

Samsung’s Kim was effusive in his praise Tuesday for Republican-led Texas, but he also acknowledged collaborations with the Biden administration and congressional leaders from both parties. Abbott said that the project would benefit from “multi-tiered” federal, state, and municipal incentives. Samsung to Build 17 Billion Chip Factory

“Improving local semiconductor manufacturing is important for our national and economic security,” US Commerce Secretary Gina Raimondo said in a written statement lauding Samsung’s decision.

Numerous chipmakers have shown an interest in expanding their operations in the United States if the federal government can make it simpler to develop chip facilities. Micron Technology, located in Boise, Idaho, announced a worldwide investment of $150 billion over the next decade in expanding its line of memory chips, with a possible expansion of manufacture in the United States if tax rebates assist offset the higher costs of American manufacturing. Pat Gelsinger, CEO of California-based chipmaker Intel, has en Samsung to Build $17 Billion Chip Factory couraged the United States to direct its semiconductor subsidies toward domestic firms. Samsung to Build 17 Billion Chip Factory

Intel revealed earlier this year intentions to spend $20 billion in two new manufacturing facilities in Arizona. Taiwan Semiconductor Manufacturing Company, or TSMC, has been developing its own manufacturing facility in Arizona.

Samsung is the global leader in memory chips, which are critical for smartphones and other gadgets, but Zino said the company is also extending its position on the “foundry side,” which refers to the manufacture-for-hire of chips created by other companies. Samsung to Build 17 Billion Chip Factory

Samsung to Build 17 Billion Chip Factory

“My anticipation is that the Texas factory would be foundry-based in nature,” he added. “This is consistent with their intention to treble the capacity of their foundry.”

Other nations have made similar efforts to bring chip manufacturing closer to the point of application. Earlier in November, the European Commission indicated that it may authorise subsidies to boost semiconductor manufacturing in the 27-nation bloc.

Williamson County officials have been working for many months on an incentive package that would attract Samsung’s facility to a rural tract between the communities of Taylor and Hutto, employing around 1,800 people. Abbott said Tuesday that the project would create more than 2,000 jobs. Samsung to Build 17 Billion Chip Factory

“It is mostly agricultural row crop and pasture now,” said Russ Boles, the county commissioner whose district includes the property. “They are looking for a location with excellent infrastructure. It has a lot of power, a lot of water, and an excellent road infrastructure. These are critical details for Samsung and the project.”

On Nov. 15, the Taylor school board approved an agreement that would allow Samsung to save money on taxes if it established a facility inside the school district’s limits. This came on the heels of government authorities in Williamson County, where Taylor is situated, previously approving tax incentives and infrastructural upgrades. The property is located around 40 minutes northeast of Austin. Samsung to Build 17 Billion Chip Factory

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