Samsung Electronics, a major player in the semiconductor industry, is expected to receive between $6 billion and $7 billion in subsidies from the U.S. government as it seeks to enhance its semiconductor production in the country. The announcement is expected next week to boost the chip output of the South Korean company in Taylor, Texas.
This investment is Samsung’s entry into the competitive space of chip investments alongside other industry giants like Intel and TSMC.
Commerce Department Secretary Gina Raimondo will reveal the subsidy, which will be directed towards the construction of four semiconductor facilities in Taylor, Texas, including a $17 billion chips making plant announced by Samsung in 2021. It will also include one more chip factory, an advanced packaging facility, and a research and development center.
Additionally, the grant will support an undisclosed location, with Samsung committing to more than double its investment in the United States to over $44 billion as part of the agreement.
The initiative mirrors the Biden administration’s support for the semiconductor industry, as evidenced by the recent announcement of grants totaling $6.6 billion to foundry company TSMC, accompanied by a $5 billion loan.
These measures, an increase from initial expectations, are attributed to the CHIPS and Science Act, enacted in 2022 to encourage the establishment of new semiconductor factories in the United States. In response to the incentives, TSMC has pledged to expand its investment from $40 billion to $65 billion and plans to construct a third plant in Arizona by 2030.
With the United States aiming to strengthen domestic chip production and attract capital away from potential investments in China and neighboring regions, Samsung’s anticipated subsidy, speculated to range between $6 billion and $7 billion. It will be the third-largest contract with the U.S. government under the program.
Last month, speculation emerged regarding subsidies for Samsung, with reports indicating that the U.S. is set to grant the Korean chipmaker subsidies exceeding $6 billion. If Samsung secures this anticipated support, it will escalate its investment in the U.S. to over $44 billion, to take a lead in the semiconductor industry.
The CHIPS Act, reducing reliance on China and Taiwan, seeks to support the U.S. semiconductor manufacturing capacity, which has dwindled from 37% in 1990 to 12% in 2020. President Joe Biden’s absence from the upcoming event, reportedly due to his reelection campaign, has put emphasis on the political importance of the subsidies, with Republican Governor Greg Abbott of Texas expected to attend.
While TSMC and Intel are expanding chip production in Arizona, Samsung’s investment in Texas, a traditionally Republican state, may have less immediate political implications. Nevertheless, Washington’s commitment to reclaiming semiconductor manufacturing from Asia aligns with the broader goal of producing 20% of the world’s most advanced chips domestically by 2030.
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