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US Offers Samsung $6.4 Billion To Increase Texas Chip Manufacture

The Department of Commerce announced on Monday that as part of a larger initiative to grow U.S. chipmaking, the Biden administration will give incentives to South Korea’s Samsung worth up to $6.4 billion so that the company can expand its chip production in central Texas.

TakeAway Points:

  • The Biden administration will give subsidies to South Korea’s Samsung of up to $6.4 billion so that the company can expand chip production in central Texas.
  • This grant will allow Samsung to grow its semiconductor plant in Austin.
  • Analysts have estimated Samsung is likely to begin making 4-nanometer chips at its pilot production line and eventually expand to 2-nanometer chips.

Samsung gets $6.4 Billion Grant

According to the government, as previously reported by Reuters, the financing from the 2022 Chips and Science Act will support two chip production facilities—a research centre and a packaging plant—in Taylor, Texas.

Additionally, according to Commerce Department Secretary Gina Raimondo, it will allow Samsung to grow its semiconductor plant in Austin, Texas. Administration officials told reporters that this will increase chip output for the aerospace, defence, and auto industries as well as strengthen national security.

“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,” Raimondo said.

Samsung Electronics Co-CEO Kyung Kye Hyun said that “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.”

Commencement of Chip Production

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.

The revelation, which made Samsung the third-largest Chips Act grant recipient, as originally reported by Reuters, is the latest attempt by the Biden administration to grow out the chipmaking business 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).

U.S. Concerns about Chips Manufacturing in Taiwan

Congress has cautioned that it would be dangerous for the United States to rely solely on chips made in Taiwan by TSMC, the largest contract chip manufacturer in the world, as China still maintains that it is the right to use force to recover the self-governing island.

John Cornyn, a Republican U.S. senator from Texas who cosponsored the original legislation, stated that “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.”

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 said in a statement.

However, 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.

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