Samsung Picks Texas for Its New $17-Billion Chip Plant

Samsung said it had picked Taylor, Texas as the location for a new $17-billion (roughly Rs. 1,26,480 crore) plant to make advanced chips for functions such as mobile, 5G, high-performance computing, and artificial intelligence.

The plant would create 2,000 high-tech jobs with construction to begin in the first half of next year, and production due to start in the second half of 2024, the South Korean tech giant said. It would also create at least 6,500 construction jobs, Texas Governor Greg Abbott said.

The world's biggest memory chipmaker and second-largest contract chip manufacturer had also considered sites in Arizona and New York for the plant, which will be much bigger than its only other US chip plant in Austin, Texas.

The company said it chose Texas based on factors such as infrastructure stability, government support and proximity to its existing plant.

Samsung is joining rivals TSMC and Intel in the race to expand chip contract manufacturing in the United States, where the sector is seen as an area of strategic competition with China.

US President Joe Biden's administration has promised billions of dollars in federal funding to boost chip manufacturing and research to ensure it has an edge over China in advanced technologies and to address shortages for critical industries like autos.

"Securing America's supply chains is a top priority for President Biden and his Administration," US National Economic Council Director Brian Deese and National Security Advisor Jake Sullivan said in a statement welcoming Samsung's investment.

"We will continue to use every tool and pursue every avenue to invest in our sources of strength like manufacturing and technology."

Abbott, flanked at a press conference by Samsung Electronics Vice Chairman Kinam Kim and US Senator John Cornyn of Texas, said the company's decision was a testament to Texas's economic environment built on low taxes, reasonable regulations and robust infrastructure.

Texas last winter suffered a multi-day, widespread power outage, causing some KRW 300 billion (roughly Rs. 1,880 crore) - KRW 400 billion (roughly Rs. 2,510 crore) in damages to Samsung's existing chip plant in Austin, Texas.

"I'm extremely confident that the power grid is stable, resilient and reliable," Abbott said on Tuesday when asked about electricity supply for the plant.

The new site in Texas's Williamson County, which comprises the city of Taylor, offered the best incentives package of the sites Samsung was considering, sources previously told Reuters.

National security

Senator Cornyn on Tuesday called on the Biden administration to invest more money to attract chip manufacturers to the United States, calling it a "national security imperative."

"If China continues to saber-rattle, the majority of the world could be at their mercy when it comes to the supply of critical semiconductors," Cornyn said.

Samsung's Kim thanked the Biden administration for "creating an environment that supports companies like Samsung as we work to expand leading-edge semiconductor manufacturing in the US."

"We also thank the administration and Congress for their bipartisan support to swiftly enact federal incentives for domestic chip production and innovation."

Samsung has not specified what the new plant will make beyond advanced logic chips which can be used to power mobile devices and autonomous vehicles.

Analysts said it would likely make cutting-edge chips of 5-nanometres or less, using machines made by the Netherland's ASML, for large clients like Qualcomm. Such chips can handle more data per area than the 14- and 28-nanometre chips Samsung's existing US plant in Austin mainly makes.

The Taylor site, about 25 miles (40kms) from Austin, spans more than 5 million square metres, Samsung said.

Samsung Electronics Vice Chairman Jay Y. Lee met White House officials as well as leaders of companies including Alphabet's Google, Amazon and Microsoft during a trip to the United States last week.

© Thomson Reuters 2021