Samsung announces investment in a US$17 billion chip factory in Texas

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The semiconductor can be seen on the circuit board.

Justin Sullivan | Getty Images

Samsung plans to build a $17 billion semiconductor factory in Taylor near Austin, Texas in the next three years as part of its efforts to increase manufacturing capacity and alleviate global chip shortages.

The South Korean technology giant announced a 5 million square meter facility on Tuesday, the day after the Wall Street Journal broke the news.

The goal of the plant is to help increase the production of advanced logic semiconductors used in mobile phones and computers.

Samsung said that it expects construction work to begin in the first half of 2022 and hopes to be put into operation in the second half of 2024.

The estimated total investment of US$17 billion will be the largest investment Samsung has ever made in the United States. This figure includes construction, property improvement, machinery and equipment.

Samsung began operations in the United States in 1978 and has more than 20,000 employees nationwide. The company said that the latest investment will bring Samsung’s total investment in the United States to more than 47 billion U.S. dollars.

In February of this year, President Joe Biden stated that domestic semiconductor manufacturing is a priority for his government. His administration hopes to address the continuing chip shortage and address the concerns of lawmakers that outsourcing chip manufacturing makes the United States more vulnerable to supply chain disruptions.

Kinam Kim, vice chairman and CEO of Samsung’s electronic device solutions division, said in a statement that the plant will help Samsung better meet the needs of its customers and “contribute to the stability of the global semiconductor supply chain.” .

King added that he thanked the Biden government and Texas partners for their support.

The governor of Texas, Greg Abbott, said the plant will provide opportunities for central Texas and his family.

Alan Priestley, vice president of emerging technologies and trends at analytics company Gartner, told CNBC that Samsung already has a complete ecosystem of partners and suppliers in Texas because it already has a factory in Austin.

“A lot of semiconductor companies have development bases in Austin, so this is a good resource pool,” he said.

“As with any major investment like this, there is no doubt that local incentives (tax breaks, financing, etc.) encourage Samsung to build in Texas,” Priestley added.

Samsung’s two main competitors in the semiconductor manufacturing market are Intel and TSMC.

In March of this year, Intel announced that it would spend $20 billion to build two new chip factories in Arizona. At the same time, TSMC is also building a new plant in Arizona.

The vast majority of chips in the world are currently manufactured in Asia, and Taiwan and South Korea are particularly active hotbeds. The United States and Europe hope to start manufacturing more of their own chips.

According to the company, TSMC is headquartered in Hsinchu, Taiwan, accounting for 24% of global semiconductor production in 2020, up from 21% in 2019.

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