In an effort to enhance its production capacity and alleviate the worldwide chip shortage, Samsung plans to build a $17 billion semiconductor facility in Taylor, Texas, over the next three years.
The 5 million square metre project was disclosed by the South Korean IT giant on Tuesday, a day after the news was first reported by The Wall Street Journal.
The factory’s goal is to increase the manufacturing of sophisticated logic semiconductors, which are used in phones and computers.
“Like other chipmakers, Samsung badly needs more capacity,” Glenn O’Donnell, vice president, and research director at analyst firm Forrester, said in an interview with CNBC.
“It is following Intel, TSMC, and others to build more production.”
Samsung has stated that construction will begin in the first half of 2022, with the facility expected to be operational by the second part of 2024.
Samsung is anticipated to invest $17 billion in the United States, which will be the greatest investment the company has ever made in the country. Buildings, property improvements, machinery, and equipment are all included in this number.
Samsung’s activities in the United States began in 1978, and the company now employs over 20,000 employees across the country. Samsung’s overall investment in the United States will now exceed $47 billion, according to the corporation.
The new factory “helps expand the geographic diversity from Asia,” O’Donnell said and added that a lack of diversity was “a problem we saw glaringly as the pandemic hit.”
President Joe Biden stated in February that domestic semiconductor production is a top goal for his administration. His administration seeks to resolve continuing chip shortages and allay legislators’ fears that outsourcing chip production has rendered the United States more vulnerable to supply chain disruptions.
The plant will help Samsung better serve its customers and “contribute to the stability of the global semiconductor supply chain,” according to Kinam Kim, vice chairman and CEO of Samsung Electronics Device Solutions Division.
Kim expressed his gratitude for the Biden administration’s and Texas partners’ cooperation.
Because it already has a manufacturing in Austin, Alan Priestley, vice president of emerging technologies and trends at research company Gartner, said that Samsung already has a well-established network of partners and suppliers in Texas.
“A lot of semiconductor companies have development sites in Austin so it’s a good pool of resource,” he said.
“As with any major investment like this there were no doubt local incentives (tax breaks, financing etc) to encourage Samsung to build in Texas,” Priestley added.
“U.S. semiconductor manufacturing has waned over the past decades and Washington rightly sees this as a national security risk. Texas has the right weather and geological stability for such a facility and a good supply of tech-savvy workers,” O’Donnell said.
Intel and TSMC are Samsung’s two biggest competitors in the semiconductor manufacturing sector.
Intel said in March that it will invest $20 billion in two new chip factories in Arizona. In the meantime, TSMC is constructing a new facility in Arizona.
The great majority of chips are presently manufactured in Asia, with Taiwan and South Korea being particularly active. The United States and Europe want to make more of their own chips.
According to TSMC, which is headquartered in Hsinchu, Taiwan, the business produced 24 per cent of the world’s semiconductors in 2020, up from 21 per cent in 2019.
(Adapted from CNBC.com)