Biden gave Samsung a $6.4 billion grant to boost Texas chip production

Biden gave Samsung a $6.4 billion grant to boost Texas chip production

The Biden administration will award up to $6.4 billion in grants to South Korea’s Samsung Electronics to expand its chip production in central Texas as part of a broader effort to boost US chipmaking, the Commerce Department said Monday.

Funding from the Chips and Science Act of 2022 will support two chip production facilities, a research center and a packaging facility, in Taylor, Texas, the agency said, as previously reported by Reuters.

It will also allow Samsung to expand its semiconductor facility in Austin, Texas, Commerce Department Secretary Gina Raimondo said, while increasing chip production for the aerospace, defense and auto industries and strengthening national security, administration officials told reporters.

“(This investment) will allow the US to once again lead the world, not only in semiconductor design, where we lead now, but also in manufacturing, advanced packaging and research and development,” Raimondo said.

Samsung Electronics Co-CEO Kyung Kye Hyun said: “To meet the expected surge in demand from US customers, for future products such as AI chips, our fab will be equipped for advanced process technology and help bring security to the US semiconductor supply chain.”

Samsung said it expects to start production in 2026. Analysts have estimated the company will likely start making 4-nanometer chips on its pilot production line and eventually expand to 2-nanometer chips.

The announcement, which makes Samsung the third-largest Chip Act awardee, as first reported by Reuters, is the latest step by the Biden administration to build the US chip manufacturing industry.

The aim is to reduce dependence on China and Taiwan, as the US’s share of global semiconductor manufacturing capacity has fallen from 37% in 1990 to 12% in 2020, according to the Semiconductor Industry Association (SIA).

Lawmakers have warned that US reliance on chips made in Taiwan by the world’s top contract chipmaker, TSMC, is risky because China claims the self-governing island as its territory and has the right to use force to retake it.

“By investing in advanced semiconductor manufacturing, we help secure this vulnerable supply chain, improve our national security and global competitiveness, and create new jobs for Texans,” said John Cornyn, the Republican US senator from Texas who co-sponsored the legislation. original .

Samsung is expected to invest about $45 billion in building and expanding its Texas facility by the end of the decade, senior administration officials said.

“We applaud Samsung for boldly investing in US-based manufacturing and commend the US Department of Commerce for making significant progress in implementing the CHIPS Act’s manufacturing incentives and R&D programs,” SIA said in a statement.

Intel won an $8.5 billion grant last month while Taiwan’s TSMC grabbed $6.6 billion in April to build its American production.