Samsung is planning to build a semiconductor plant in Taylor near Austin, Texas. According to plans outlined by the electronic major, the chip factory would cost around USD 17 billion. It will be built over the next three years and is likely to create over 2,000 jobs. The factory is being built as part of an effort to increase the production of semiconductors amid the global shortage. This will also make Samsung’s presence more strong in Texas. Once fully completed, this is going to bolster the role of the South Korean giant in the global manufacturing supply chain. The company will focus on manufacturing advanced logic semiconductors.
They are high in demand and are used in phones and computers. The company has also shared details about the 5 million square meter facility in Texas. Experts feel the South Korean company badly needs to increase the production capacity of semiconductors, just like other chipmakers. \”Samsung is following footsteps of Taiwan Semiconductor Manufacturing Company, Intel and other such companies in building more production plant,\” Glenn o\’ Donnell was quoted as saying in a report. Donnell is research director and vice president at analyst firm Forrester. Samsung said that work to construct the building is expected to start in the first half of 2022 and the site is likely to be operational in the second half of 2024.
The decision to open a new chip manufacturing factory in Texas has been welcomed by the official of the White House. Officials said that the new chip plant would not only protect supply chains but will also help in boosting domestic manufacturing. US Commerce Secretary Gina Raimondo lauded the company for its decision. While the plant would create 2,000 direct jobs, Samsung has said that the project – once fully operational – would indirectly create thousands of jobs. Texas Governor Greg Abbott said that the implications of the upcoming chip plant are not going to be limited within the boundaries of Texas.
“The semiconductor plant will impact the entire world,” Abbott said. The plant will come up in Taylor, about 30 miles from Austin. The South Korean company has already invested billions in a sprawling complex. The complex is already producing some of the most sophisticated chips in the country and has more than 3,000 employees. Samsung is likely to invest USD 17 billion and this will be the largest investment by the company ever in the United States. The investment includes everything – buildings, machinery, and equipment.
Samsung has been operational in the United States since 1978. The South Korean company employs more than 20,000 people across the country. With the announcement of a new chip plant, the total investment of the company in America is now more than USD 47 billion. Samsung has selected Texas as its destination for new chip plants because of the low taxes and easy access to the talent pool. “The decision of the South Korean company to invest in Texas is a testament to the economic environment that we have built,” said Abbott. Samsung can receive incentives of up to USD 3 billion from the USD 52 billion bill which is known as the CHIPS Act if it passes.
Commenting on the decision to build a chip factory in Texas, Samsung executive Kinam Kim said that it was based on several factors. “Apart from infrastructure readiness and stability, the availability of local talent and incentive program is also important,” Kim said. Infrastructure is very important for such factories as they need a stable power supply. It must be noted that Samsung and other companies had to pause operations because of a cold snap earlier this year. However, officials have assured companies that they will not have to face outages again. Also, Texas has been producing more power than last year. The new production facilities in America further the goal of the Biden administration of making sure that there is no shortage of cutting-edge chips. These chips play important role in autonomous cars and are vital to defense. Several industries face a shortage of chips this year.
This forced companies to reduce their production. Several carmakers had to revise their production estimates. Meanwhile, Taiwan Semiconductor Manufacturing Co. is also making substantial investments in America. Another Samsung rival Intel has already announced its plans to build a new chip factory in Arizona. Intel will spend around USD 20 billion on this. TSMC will invest USD 12 billion in a chip plant in Arizona. The United States and Europe want to increase the production of chips as they have been mainly made in Asia. However, they are not going to address the chip shortage immediately. But they can be helpful in future in attracting more business.