Despite being one of the biggest names in chip production, Samsung is making more commitment. It has announced its plan to build a new chip-making plant in Texas, costing up to $17 billion.
Samsung already produces chips in Austin, Texas. The new plant is located in Taylor, only 30 miles away from the Austin plant. The new plant, located on a 1,200-acre site, will employ about 1,800 people directly and thousands more indirectly when operational. It is also larger than Samsung’s first chip plant in Texas.
This is the single largest investment by Samsung in the U.S. and brings the total to $47 billion since it began operating in the country in 1978.
Construction in Taylor is expected to start next year, with the first production coming in 2024. The advanced manufacturing facility will make chips for Samsung’s use and other companies.
Reports indicate the city of Taylor attracted Samsung with the promise of incentives, which generously provided up to 90 percent property tax breaks for its first ten years. However, Samsung explains it considered other factors such as the existing semiconductor ecosystem, infrastructure stability, and community development opportunities. Other places Samsung evaluated included Arizona, New York, and even South Korea.
Samsung will likely make chips for other companies based on the companies’ designs at the new 5 million square-meter Taylor plant, including advanced 3nm chips. In its years of making chips, Samsung has produced for many companies, including Qualcomm and Nvidia.
Apart from making chips in Taylor, Samsung will contribute to building a Samsung Skills Center that will develop students’ future career skills and open up internship opportunities.
Vice-chairman and CEO of Samsung Electronics Device Solution Division, Kinam Kim, said, “With greater manufacturing capacity, we will be able to better serve the needs of our customers and contribute to the stability of the global semiconductor supply chain. In addition to our partners in Texas, we are grateful to the Biden Administration for creating an environment that supports companies like Samsung as we work to expand leading-edge semiconductor manufacturing in the U.S. We also thank the administration and Congress for their bipartisan support to swiftly enact federal incentives for domestic chip production and innovation.”
There is no better time for Samsung to build a new chip plant than the moment when global semiconductor shortages continue to plague manufacturers from a diverse range of industries. It has caused smartphone makers to reduce their production, for example. Some console makers are affected too. However, another group that is hit by the chip shortage is automobile manufacturers.
Some carmakers, like Ford, had to pause production due to the inability to source for chips, while companies like Tesla scrambled to rewrite their software to work on other chips. That, however, was not enough to insulate the electric vehicle company from the effect of the scarcity. Some of its models have been delivered without ports, which the company attributes to the shortage.
Other carmakers are responding by removing some features such as touchscreen and heated seats.
Going by the submissions of the CEO of Intel, Pat Gelsinger, the chip crisis will persist until 2023 and continue to upend manufacturers’ plans globally.
As noted in Kim’s statement, the U.S. government is responding to the chip shortage by taking steps to boost the country’s chip production capacity, which means reversing the recent trend of declining share in the global chip industry. Another move is trying to limit the potential disruption to the supply chain in the chip industry. The CHIPS Act also allocates $52 billion to be spent as subsidies for building chip production facilities. It is awaiting passage in the House of Representatives after making it through the Senate.
Other chip makers are also planning expansion. For example, TSMC and Sony are building a $7 billion plant in Japan that will start production in 2024. However, TSMC has its audacious expansion plans as it wants to spend over $100 billion on new factories within the next three years, including a new $12 billion facility in Arizona.
Samsung, however, plans to invest more than $205 billion in semiconductor and related businesses globally in the next three years.
Intel has a similar expansion budget, although it plans for the next decade and will open plants in the U.S. and Europe.