As part of a larger initiative to support U.S. chipmaking, the Biden administration will provide South Korea’s Samsung (005930. KS) incentives worth up to $6.4 billion and create a new tab to expand its chip production in central Texas, the Department of Commerce announced on Monday.
According to the government, two chip production facilities in Taylor, Texas—a research center and a packaging facility—will be supported by financing from the 2022 Chips and Science Act.
Along with increasing chip output for the aerospace, defense, and automotive industries and bolstering national security, administration officials informed reporters that it will also allow Samsung to expand its semiconductor factory in Austin, Texas, as stated by Gina Raimondo, secretary of the Commerce Department.
“(These investments) will allow the U.S. to once again lead the world, not just in semiconductor design, which is where we do now lead, but also in manufacturing, advanced packaging, and research and development,” added Raimondo.
Kyung Kye Hyun, co-CEO of Samsung Electronics “To meet the expected surge in demand from U.S. customers, for future products like AI chips, our fabs will be equipped for cutting-edge process technologies and help bring security to the U.S. semiconductor supply chain.”
According to Samsung, production is scheduled to start in 2026. Analysts predict that Samsung will use its pilot production line to start producing 4-nanometer semiconductors before moving on to 2-nanometer chips.
As initially reported by Reuters, the news places Samsung as the third-largest recipient of the Chips Act award. This is the latest action taken by the Biden administration to expand the chipmaking sector in the United States.
As the United States’ portion of the world’s semiconductor production capacity has decreased from 37% in 1990 to 12% in 2020, the aim is to lessen dependency on China and Taiwan, according to the Semiconductor Industry Association (SIA).
Lawmakers have cautioned that it would be dangerous for the United States to rely solely on chips made in Taiwan by TSMC (2330.TW), the largest contract chip manufacturer in the world, as China has the right to use force to retake the self-governing island.
“By investing in leading-edge semiconductor manufacturing, we are helping secure this vulnerable supply chain, boosting our national security and global competitiveness, and creating new jobs for Texans,” said John Cornyn, a Republican U.S. senator from Texas who cosponsored the original legislation.
Samsung is expected to invest roughly $45 billion in building and expanding its Texas facilities through the end of the decade, said senior administration officials.
“We applaud Samsung for investing boldly in U.S.-based manufacturing and salute the U.S. Commerce Department for making significant headway in implementing the CHIPS Act’s manufacturing incentives and R&D programs,” SIA stated in a statement.
Taiwan’s TSMC secured $6.6 billion in April to expand its production in the United States, while Intel secured $8.5 billion in funding last month.
