Samsung Reportedly Picks This Tiny Town In Texas For A Massive $17 Billion Chip-Making Factory

WSJ reports Texas Gov. Greg Abbott is scheduled to make a major “economic announcement” on Tuesday at 5 pm local time concerning new plans for a massive semiconductor plant in Taylor, Texas.

South Korean tech giant, Samsung Electronics Co., is doubling down in Texas with another facility, about 30 miles from its manufacturing hub in Austin. The new Taylor facility will cost a whopping $17 billion and create 1,800 jobs. Chip production wouldn’t start until the second half of 2024.

WSJ said officials in Taylor incentivized Samsung by giving them “property-tax breaks of up to 92.5% for the first ten years, with the write-offs gradually declining over the next several decades.”

“A final decision has not yet been made regarding the location,” a Samsung spokeswoman said.

Samsung is taking advantage of the Biden administration’s effort to lure advanced manufacturing back to the U.S., especially semiconductor production, as global supply chains are being reworked around China.

In February, President Biden signed an executive order to address the global semiconductor chip shortage. “Make no mistake, we’re not simply planning to order up reports. We are planning to take actions to close gaps as we identify them,” an administration official said at the time.

Then in July, the Biden administration announced a “supply-chain disruptions task force” to identify bottlenecks. Secretary of Commerce Gina Raimondo has headed up the task force with the help of “Mayor Pete,” focused on semiconductors and other areas, including homebuilding and construction.

This year’s semiconductor shortage has been very disruptive to domestic manufacturing firms. The problem is that while U.S. semiconductor firms account for 47% of global chip sales, only 12% of production is domestic. In the 1990s, the U.S. accounted for 37% of the global output.

Is this move the beginning of Biden’s “Build Back Better” strategy working? Or is this reflective of a red state’s more-open and less-taxed status as being attractive for global competition? The U.S. is also seeking independence from China on large-capacity batteries for electric vehicles, rare earth minerals, and pharmaceuticals.

Another source:

Samsung Eyes New $10 Billion Texas Semiconductor Plant

It isn’t just Silicon Valley CEOs and New York financial firms that are making the move to Texas.

Now, even Samsung is considering a $10 billion investment in the state to build an advanced chipmaking plant, according to Bloomberg. The company hopes that such a move could win it more U.S.-based clients and help it catch up with Taiwan Semiconductor.

Samsung is currently in discussions to potentially put a plant in Austin that would be “capable of fabricating chips as advanced as 3 nanometers in the future,” the report says. Plans are still in preliminary stages.

Such a plant would be expected to begin operations as early as 2023.

The company is hoping to play on the U.S. government’s continued hawkishness with China, which could encourage domestic production. The plant, if manufactured, would be the “first in the U.S. to use extreme ultraviolet lithography, the standard for next-generation silicon,” Bloomberg wrote. Samsung would almost certainly have to negotiate incentives with President Joe Biden’s administration to make the deal happen.

Greg Roh, senior vice president at HMC Securities. commented: “If Samsung really wants to realize its goal to become the top chipmaker by 2030, it needs massive investment in the U.S. to catch up with TSMC. TSMC is likely to keep making progress in process nodes to 3nm at its Arizona plant and Samsung may do the same. One challenging task is to secure EUV equipment now, when Hynix and Micron are also seeking to purchase the machines”.

The move could put Samsung “head-to-head” against rival Taiwan Semiconductor, which has its own plans to build a $12 billion plant in Arizona by 2024. Samsung has said it aims to be the biggest player in the semiconductor industry, with aims of investing $116 billion into its foundry and chip design over the next 10 years.

Samsung purchased land in October next to its existing fab in Austin. The city’s council held a meeting in December to discuss Samsung’s request to rezone the land for industrial development.

Samsung’s chip division spent $26 billion on capex in 2020, but that largely supported the company’s memory business, where Samsung has long dominated.

South Korean Chipmaker SK Hynix Halts Expansion Plans In China Due To U.S. Trade Restrictions

The 'intergrated circuit'(chip) was invented by Jack Kilby at Texas Instruments in 1958.

Jack Kilby

"Jack St. Clair Kilby (November 8, 1923 – June 20, 2005) was an American electrical engineer who took part (along with Robert Noyce of Fairchild) in the realization of the first integrated circuit while working at Texas Instruments (TI) in 1958. He was awarded the Nobel Prize in Physics on December 10, 2000.[1] Kilby was also the co-inventor of the handheld calculator and the thermal printer, for which he had the patents. He also had patents for seven other inventions.[2] "

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