South Korean technology giant Samsung Electronics has said it will build a $ 17 billion chip plant outside Austin, Texas, to make advanced chips used in phones, cars and other electronic devices.
The plant will create 2,000 high-tech jobs with construction set to begin in the first half of next year, and production set to begin in the second half of 2024, Samsung said in a statement on Wednesday. It will also create at least 6,500 construction jobs, Texas Gov. Greg Abbott said in a press release.
The world’s largest memory chip maker and second largest contract chip maker have also considered sites in Arizona and New York for the plant, which will be much larger than its only other U.S. chip plant in Austin.
Samsung has again chosen Texas because of its infrastructure, government support and the proximity of its existing plant, he said.
A shortage of chips has emerged as both a business barrier and a serious national security issue for the United States. Short supplies of semiconductors kicked off by COVID-era shutdowns hampered the production of new vehicles and electronic devices for more than a year.
New questions about economic and national security are also on the agenda as many US companies depend on chips produced overseas, especially in Taiwan, which China has long claimed as its territory.
“It’s a concentration risk, a geopolitical risk” to be so dependent on Taiwan for a large part of the world’s chip production, “said Nina Turner, an analyst at IDC. She said current shortages are likely to decrease, but there will be a long-term demand for chips as more and more everyday products rely on them.
Many chipmakers are spreading their manufacturing operations, which are now concentrated in Asia, in response to the shortages, which have taken a toll on sectors from automakers to the video game industry.
Abbott, at a press conference by Samsung Vice President of Electronics, Kinam Kim, and U.S. Senator John Cornyn of Texas, said the company’s decision to choose Texas is evidence of the state’s low – tax economic environment. reasonable regulations and robust infrastructure.
Texas suffered a multi-day, widespread power outage last February, causing some 300-400 billion won ($ 254- $ 339m) in damages to Samsung’s existing drive in Austin.
“I am extremely confident that the power grid is stable, resilient and reliable,” Abbott said when asked about the power supply for the plant.
The new website in Texas’ Williamson County, which consists of the city of Taylor, offers the best incentive package of the sites that Samsung has considered, sources previously told the Reuters news agency.
Abbott’s office said Tuesday that Samsung will also receive a $ 27 million grant from the Texas Enterprise Fund for its job creation. His office did not immediately respond to requests for additional details about incentives Samsung received.
U.S. President Joe Biden’s administration has pledged billions of dollars in federal funding to boost chip manufacturing and research to ensure it has an edge over China in advanced technologies and to address deficits for critical industries such as automobiles.
Senator Cornyn on Tuesday called on the Biden administration to invest more money in attracting chipmakers to the US, calling it a “national security requirement”.
“If China continues to saber-rattle, the majority of the world could be at their mercy when it comes to providing critical semiconductors,” Cornyn said.
Kim of Samsung in a statement thanked the Biden administration for “creating an environment that supports companies like Samsung as we work to expand leading semiconductor manufacturing in the US.”
“We also thank the administration and Congress for their dual support for rapidly introducing federal incentives for domestic chip production and innovation.”
Samsung has not specified what the new plant will make as advanced logic chips, which can be used to power mobile devices and autonomous vehicles.
Analysts said it would likely make the latest chips of 5 nanometers or less, with machines made by the Dutch ASML, for large customers such as Qualcomm.
Such chips can handle more data per area than the 14- and 28-nanometer chips that Samsung’s existing U.S. plant in Austin mainly manufactures.