Samsung To Receive up to $6.6 Billion for Texas Chip Plant Expansion

Next week, the Biden administration is set to reveal that it will grant over $6 billion to the South Korean multinational manufacturing conglomerate Samsung to expand its chip production in Taylor, Texas. According to sources familiar with the matter, this move aims to boost chip manufacturing within the U.S.

A source disclosed that the funding, to be announced by Commerce Department Secretary Gina Raimondo, will be allocated for constructing four facilities in Taylor. These include a $17 billion chipmaking plant announced by Samsung in 2021, as well as another factory, an advanced packaging facility, and a research and development center.

The source also mentioned that the financial backing will include another location, which has not been disclosed yet. This implies that Samsung’s total investment in the U.S. will exceed $44 billion, more than twice as much as its previous agreement.

A source revealed that Samsung’s grant would be the third biggest within the program, closely following Taiwan’s TSMC. TSMC was given a $6.6 billion award earlier in the week and committed to boosting its investment from $40 billion to $65 billion. To add to this, TSMC plans to establish a third factory in Arizona by 2030.

The announcement marks the end of a series of significant Chips and Science grants awarded back to back recently. This highlights the efforts the U.S. is making to strengthen domestic chip manufacturing and captivate investments that could have otherwise been allocated toward establishing plants in China and surrounding areas.

In 2022, Congress passed the Chips and Science Act aimed at enhancing domestic semiconductor production with $52.7 billion in research and manufacturing subsidies. Lawmakers also authorized $75 billion in government loan capacity, even though a source said Samsung plans to avoid loans.

The goal of the CHIPS Act is to bring down U.S. dependence on China and Taiwan. Data from the Semiconductor Industry Association reveals that the U.S.’s share of global semiconductor manufacturing capacity has dropped from 37% in 1990 to 12% in 2020.

Although both TSMC and Intel are growing their U.S. chip output in Arizona, with Intel getting $8.5 billion for this reason last month, Samsung’s expansion in Texas, which is a predominantly Republican state, is not expected to significantly impact Biden’s standing in the upcoming election.