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Samsung builds $17 billion chip factory in Texas

Samsung Electronics chose the city of Taylor in Texas to house its planned $17 billion chip factory as the South Korean tech group reacts to the Biden administration’s push to expand semiconductor production in the US. .

The new plant will be Samsung’s most advanced semiconductor facility and is intended to help the world’s largest memory chip maker catch up with Taiwanese rival TSMC in foundry, a lucrative market for non-core processor chips. memory for other companies.

Washington has urged tech companies to build more factories in the US amid a global chip war flared by prolonged shortages that have affected industries from autos to home appliances.

Samsung said the $17 billion plant would mark its largest investment in the US and its largest foreign direct investment in Texas. It will help advance the production of advanced logic chips used in smartphones, high-performance computers and artificial intelligence.

The plant, which will create more than 2,000 high-tech jobs, will be operational in the second half of 2024 after construction begins in the first half of next year. “With our larger production capacity, we will be able to better serve the needs of our customers and contribute to the stability of the global semiconductor supply chain,” said Kinam Kim, Vice President of Samsung. .

Under pressure from US officials, who see semiconductors as a strategically important industry in the country’s technology competition with China, Intel broke ground on two plants in Arizona in September while TSMC was working on the same technology. built a $12 billion manufacturing plant in the same state.

Samsung had a foundry chip factory in Austin, Texas, where production was suspended for the first quarter because a winter storm caused power outages, resulting in damages ranging from $254 million to $339 million.

The production loss shows the importance of stable utilities to a highly automated chip factory, according to analysts, but Samsung chose Taylor, 25km northeast of Austin, as the location. for the second factory because it offers huge tax incentives, analysts say.

Taylor Mayor Brandt Rydell said: “Samsung’s decision to place Samsung’s advanced semiconductor fabrication plant in Taylor is the most significant and significant development to the local economy since International & The Great Northern Railroad was located here in the 1870s.”

Notice was made as Samsung leader Lee Jae-yong returned from the US – his first overseas trip since being released from prison in August. He met with White House officials and lawmakers to discuss chip factory and supply chain issues corporate response. The Senate in June passed a bill providing new chip factories with $52 billion in subsidies this year, though the House has yet to consider it.

“Domestic semiconductor manufacturing is critical to sustaining and growing U.S. leadership and innovation in one of our most important industries,” said Gina Raimondo, Secretary of Commerce. I.”

Samsung’s plan comes as the US, China and Europe are competing to promote investment to reduce dependence on foreign-made computer chips. Most semiconductors are manufactured in South Korea, Taiwan and China, while the US accounts for only 12% of global production.

Kim Young-woo, an analyst at SK Securities in Seoul, said: “The new factory will help Samsung reduce the cost gap with TSMC in foundry production and reduce potential risks related to trade barriers. trade by increasing domestic output. “It will also please US politicians as they have succeeded in attracting more advanced chip production.”

Additional reporting by Justin Jacobs in Houston and Demetri Sevastopulo in Washington

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