Samsung plans $23b Texas chip plant, creating 2,000 jobs

SEOUL • Samsung Electronics has unveiled plans to invest US$17 billion (S$23 billion) in a new advanced chip plant in Texas, a marquee project that will fortify the US semiconductor industry.

"Increasing domestic production of semiconductor chips is critical for our national and economic security," US Commerce Secretary Gina Raimondo said in a statement on Tuesday.

The project will create more than 2,000 jobs, Texas Governor Greg Abbott said at a press conference announcing the plans. "The implications of this facility extend far beyond the boundaries of Texas," Mr Abbott said. "It's going to impact the entire world."

South Korea's largest company will build the facility in Taylor, Texas, about 48km from Austin, where Samsung has invested billions in a sprawling complex that already houses more than 3,000 employees and fabricates some of the country's most sophisticated chips. Construction is slated to start in the first half of next year, and the plant will begin production in the second half of 2024.

Samsung joins Taiwan Semiconductor Manufacturing Company (TSMC) in investing heavily in the United States. The new facilities further the Biden administration's goal of safeguarding the production of cutting-edge chips vital to defence and technologies like autonomous cars.

It is part of the broader US effort to counter China's rising economic power, as well as lure home some of the advanced manufacturing that in past decades has gravitated towards Asia.

"Samsung's new plant will help narrow the gap with TSMC's production capability by making chips at the clients' home," said Meritz Securities analyst Kim Sunwoo. "As the US prioritises domestic chip manufacturing, the company will be able to receive various benefits with its production base in the country."

The global chip crunch exposed the industry's imbalances, leading governments to court TSMC and Samsung - the two companies that make most of the world's most advanced chips for clients like Apple and Nvidia.

Neither the Texas project nor TSMC's US$12 billion Arizona expansion will alleviate the shortages at once. But they could lay the groundwork for a future US-centred chip ecosystem by attracting and training the component suppliers that typically spring up around such operations.

In June, President Joe Biden laid out a sweeping effort to secure critical supply chains, including a proposed US$52 billion to bolster domestic chipmaking. His administration has repeatedly voiced the need to boost semiconductor production in the US, saying it was the best way to compete with China and mitigate disruptions like those stemming from Covid-19.

Samsung spent months reviewing different sites and incentive packages before picking Taylor.

Samsung's de facto leader Lee Jae-yong green-lighted the project after a recent US trip where he met prospective clients and partners from Alphabet's Sundar Pichai to Amazon.com and Microsoft.

The local government pulled out the stops, including waiving 90 per cent of property taxes for a decade, and 85 per cent for the following 10 years. The project could also receive additional tax breaks because it is in a federal opportunity zone, a programme designed to spur investment in poor areas.

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A version of this article appeared in the print edition of The Straits Times on November 25, 2021, with the headline 'Samsung plans $23b Texas chip plant, creating 2,000 jobs'. Subscribe