Samsung Electronics has chosen the city of Taylor in Texas for its $ 17 billion planned U.S. chip plant as the South Korean technology group responds to the Biden administration’s effort to expand semiconductor production in the US.
The new plant will be Samsung’s most advanced semiconductor facility and is intended to help the world’s largest memory chip manufacturer overtake Taiwanese rival TSMC in the foundry sector, the lucrative market for non-memory processing chips for other companies.
Washington has encouraged technology companies to build more plants in the US amid global chip wars caused by a prolonged shortage that has affected many industries from cars to household appliances.
Samsung said the $ 17 billion plant would be its largest investment in the US and the largest foreign direct investment in Texas. This will help promote the production of advanced logic chips used in smartphones, high performance computers and artificial intelligence.
The plant, which will create more than 2,000 high-tech jobs, will be operational in the second half of 2024 after construction began in the first half of next year. “With greater manufacturing capacity, we will be able to better meet the needs of our customers and contribute to the stability of the global semiconductor supply chain,” said Kinam Kim, Samsung’s vice president.
Under pressure from U.S. officials who see semiconductors as a key strategic industry in the country’s technology rivalry with China, Intel broke into two plants in Arizona in September while TSMC was building a $ 12 billion manufacturing plant in the same state.
Samsung already has a foundry chip plant in Austin, Texas, where production was suspended in the first quarter due to a winter storm that caused interruptions, resulting in $ 254 million- $ 339 million in damage.
The production losses underscored the importance of stable utilities for a highly automated chip plant, but Samsung chose Taylor, 25 miles northeast of Austin, as the location for its second plant as it offers huge tax incentives, according to analysts.
“Samsung’s decision to locate its leading semiconductor manufacturing facility in Taylor is the single most significant and consequential development for the local economy since the International & Great Northern Railroad tracks here in the 1870s,” said Taylor’s Mayor Brandt Rydell , said.
The announcement was made as Samsung Leader Lee Jae-yong returned from the US – his first overseas trip since his release from prison in August. He met with White House officials and lawmakers to discuss the group’s chip plant and supply chain issues. The Senate approved a bill in June to provide new chip-making plants with $ 52 billion in subsidies this year, though the House has yet to consider it.
Secretary of Commerce Gina Raimondo said, “Domestic semiconductor manufacturing is critical to maintaining and growing U.S. leadership and innovation in one of our most critical industries.”
Samsung’s plan comes as the US, China and Europe compete to boost investment to reduce reliance on overseas computer chips made. Most semiconductors are manufactured in South Korea, Taiwan and China, while the US accounts for only 12 percent of world production.
“The new plant will help Samsung reduce its cost gap with TSMC in foundry production and alleviate potential risks associated with trade barriers by increasing local production,” said Kim Young-woo, an analyst at SK Securities in Seoul. “It will also satisfy American politicians as they have succeeded in attracting more advanced chip production.”
Additional post by Justin Jacobs in Houston and Demetri Sevastopulo in Washington