Leah Douglas and Alexandra Alper
(Reuters) – The Biden administration will award up to $6.4 billion in grants to South Korean company Samsung to expand chip production in Central Texas as part of a broader effort to boost U.S. chip production, the Commerce Department said on Monday.
Funding from the 2022 Chips and Science Act will support two chip manufacturing facilities, a research center and a packaging facility in Taylor, Texas, the agency said, as previously reported by Reuters.
It would also allow Samsung to expand its semiconductor plant in Austin, Texas, Commerce Secretary Gina Raimondo added, while boosting chip production for the aerospace, defense and auto industries and bolstering national security, administration officials told reporters.
“(This investment) will allow the U.S. to once again become a leader in the world, not only in semiconductor development, where we currently lead, but also in manufacturing, advanced packaging, and research and development,” Raimondo said.
Samsung Electronics (KS:) Co-CEO Kyung Kyo-hyun said, “To meet the expected increase in demand from US customers for future products such as artificial intelligence chips, our factories will be equipped with advanced manufacturing processes and help ensure a secure semiconductor supply chain in USA”.
Samsung said it plans to begin production in 2026. Analysts estimate that Samsung will likely start producing 4-nanometer chips on its pilot production line and eventually expand to 2-nanometer chips.
The announcement, which made Samsung the third-largest recipient of the Chip Act Award, as first reported by Reuters, is the latest move by the Biden administration to boost the chip industry in the United States.
The goal is to reduce dependence on China and Taiwan as the U.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 U.S. dependence on chips made in Taiwan by the world’s leading contract chipmaker, TSMC, is risky as China claims the self-ruled island as its territory and reserves the right to use force to take it back.
“By investing in advanced semiconductor manufacturing, we are helping to protect this vulnerable supply chain, enhancing our national security and global competitiveness, and creating new jobs for Texans,” said John Cornyn, a Republican U.S. senator from Texas who co-sponsored original law. .
Samsung is expected to invest about $45 billion to build and expand its Texas operations by the end of the decade, senior administration officials said.
“We applaud Samsung for its bold investment in U.S. manufacturing and applaud the U.S. Department of Commerce for making significant progress in implementing the CHIPS Act manufacturing incentives and research and development programs,” SIA said in a statement.
Intel (NASDAQ:) won $8.5 billion in grants last month, and Taiwan’s TSMC received $6.6 billion in April to boost its U.S. operations.