Samsung spends $17 billion to build a chip factory in Texas

Samsung Electronics As the South Korean technology group responded to the Biden government’s push to expand semiconductor production in the United States, the South Korean technology group has selected Tyler, Texas as its planned $17 billion US chip factory.

The new factory will become Samsung’s most advanced semiconductor factory, aiming to help the world’s largest memory chip manufacturer catch up with Taiwan’s competitor TSMC in the foundry sector, which is a lucrative market for producing non-storage processor chips for other companies .

Washington has been urging technology companies to build more factories in the United States, because chronic shortages have triggered a global chip war, affecting many industries from automobiles to home appliances.

Samsung said the $17 billion factory will mark its largest investment in the United States and the largest foreign direct investment in Texas. This will help promote the production of advanced logic chips for smart phones, high-performance computing and artificial intelligence.

The plant will create more than 2,000 high-tech jobs and will be put into operation in the second half of 2024 after construction starts in the first half of next year. “With greater manufacturing capabilities, we will be able to better meet customer needs and contribute to the stability of the global semiconductor supply chain,” said Samsung Vice Chairman Kinam Kim.

Under pressure from U.S. officials to regard semiconductors as a key strategic industry in the country’s technological competition with China, Intel broke ground on two factories in Arizona in September, while TSMC is building a $12 billion manufacturing facility in the same state. factory.

Samsung already has a foundry chip factory in Austin, Texas. Due to power outages caused by winter storms, the factory suspended production in the first quarter, causing losses of between 254 million and 339 million U.S. dollars.

Analysts said that production losses highlighted the importance of stabilizing utilities for highly automated chip factories, but Samsung chose Taylor, 25 kilometers northeast of Austin, as the location of its second factory because it provided huge tax incentives.

“Samsung decided to locate its cutting-edge semiconductor manufacturing plant in Taylor, which is the most important and important development for the local economy since the international and Great Northern Railways laid tracks here in the 1870s,” said Taylor Mayor Brandt Ryder .

The announcement is as Samsung’s leader Lee Jae-yong Returning from the United States-This is his first overseas trip since his release from prison in August. He met with White House officials and legislators to discuss the group’s chip factory and supply chain issues. In June of this year, the Senate passed a bill to provide $52 billion in subsidies for new chip manufacturers, although the House of Representatives has not yet considered it.

Secretary of Commerce Gina Raimondo (Gina Raimondo) said: “Domestic semiconductor production is critical to maintaining and developing American leadership and innovation in one of our most critical industries.”

Samsung’s plan comes as the United States, China, and Europe are vying to increase investment to reduce their dependence on foreign-made computer chips. Most semiconductors are manufactured in South Korea, Taiwan and China, while the United States accounts for only 12% of global production.

“The new factory will help Samsung narrow the cost gap with TSMC in terms of foundry production, and increase local production to alleviate potential risks related to trade barriers,” said Kim Young-woo, an analyst at SK Securities in Seoul. “This will also satisfy American politicians because they have successfully attracted more advanced chip production.”

Additional reporting by Justin Jacobs in Houston With Dmitry Sevastopoulo in Washington

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