Samsung Electronics has decided to build an advanced US chip factory in Texas, a win for the Biden administration as it prioritizes supply chain security and greater semiconductor capacity on US soil.
South Korea’s largest company decided to choose Taylor City, about 30 miles from the current giant manufacturing center in Austin, a person familiar with the matter said. Samsung and Texas officials will announce the decision Tuesday afternoon, according to people familiar with the matter, requesting anonymity because the news has not been made public. A Samsung representative said it had not made a final decision and declined to comment.
Samsung hopes to win more US customers and narrow the gap with Taiwan Semiconductor Manufacturing Co., Ltd. Its decision, which came months after de-facto leader Jay Y. Lee was released from prison in exchange for a conditional pardon, follows plans by TSMC and Intel Corp to spend billions. The most modern facilities in the world. The industry trio is racing to meet the post-pandemic surge in demand that has maximized global capacity, while more and more connected devices from cars to homes will require chips in the future.
The new plant will bolster Samsung’s already large presence in Austin, where it has invested about $17 billion to date in a sprawling complex that has more than 3,000 employees and makes some of the most advanced chips in the country. Samsung plans to invest another $17 billion and create about 1,800 jobs over the first 10 years, according to documents the company provided to Taylor officials.
The Korean Yonhap News Agency and the Wall Street Journal earlier reported on Taylor’s selection.
The Asian giant is benefiting from US government efforts to counter China’s growing economic prowess and attract some of the advanced manufacturing that in past decades gravitated toward Asia. That ambition crystallized after global chip shortages crippled the tech and auto industries, cost companies billions in lost revenue and forced factories to lay off workers, exposing the United States’ vulnerability to diversified supply chains. In June, President Joe Biden made a sweeping effort to secure critical supply chains, including a proposed $52 billion to boost the domestic chip industry.
His administration has repeatedly expressed the need to ramp up chip production in the US, saying this is the best way to compete with China and mitigate supply chain disruptions like those caused by Covid 19. Last month, the US set up an “early warning system” to detect shocks related to Covid. It asked semiconductor producers and consumers to complete a survey on inventories, demand, and delivery systems to identify potential problems.
Recently, Intel’s problems over the technology and its possible future dependence on TSMC and Samsung for at least some of the chip makers have escalated, underscoring how far the Asian giants have progressed in recent years. Management has prevented Intel from pursuing its plans to operate a plant in Chengdu, China, to manufacture silicon chips.
The White House also called on House Democrats to pass a $52 billion bill known as the CHIPS Act, which would fund domestic semiconductor research and manufacturing. Administration officials pointed to the bill when pressed about security concerns in Taiwan, the world’s largest chip producer. Commerce Secretary Gina Raimondo said Congress should pass the legislation “as quickly as possible” when asked if the United States needed a clearer defense strategy for the island.
Samsung is adding to a growing list of companies relocating or expanding to Texas. Last year, electric car maker Tesla Inc. It will move the headquarters to the state, as has Oracle Corp. and Hewlett Packard Enterprise Co. The state’s business-friendly tax policies are preparing for reelection battle next year.
The local government pulled layoffs to hold Samsung back, including waiving 90% of property taxes for a decade, and 85% for the next 10 years. Abbott is scheduled to make a statement on the state’s economy at 5 p.m. local time on Tuesday.
Samsung itself has been accelerating investment activity since Lee was released from prison, where he was serving a prison sentence for corruption. It has unveiled a commitment to boosting South Korea’s economy by spending 240 trillion won ($205 billion) and expanding employment to 40,000 people over the next three years.
It’s going head-to-head in Intel’s backyard with TSMC, which is on track to start production at its $12 billion chip plant in Arizona by 2024. Companies of the world — a particularly pivotal capability given the growing shortage of semiconductors In recent months.
The envisioned Samsung foundry in the United States will rely on ASML Holding NV’s high-ultraviolet lithography equipment. The company, which has struggled with poor revenue from its advanced chip operations for years, is improving and accelerating the expansion of its in-house capacity. It aims to mass-produce 3-nm chips via so-called Gate All Around technology around 2022, using what some see as a game-changing technology that can more precisely control current flows through channels, shrink areas of chips, and reduce power consumption. Rival Intel has pledged to regain its industry leadership by 2025.
– Assisted by Justin Sink, Debbie Wu, Peter Elstrom, Tom Giles and Matthew Miller.