64.7 F
Los Angeles
Sunday, May 26, 2024

U.S. grants Samsung $6.4 billion CHIPS Act subsidy for Texas investment

Must read

- Advertisement -
Korean President Yoon Suk Yeol looks on as U.S. President Joe Biden delivers remarks during a visit to a semiconductor factory at the Samsung Electronics Pyeongtaek Campus in Pyeongtaek, Korea, May 20, 2022. [REUTERS]
Korean President Yoon Suk Yeol looks on as U.S. President Joe Biden delivers remarks during a visit to a semiconductor factory at the Samsung Electronics Pyeongtaek Campus in Pyeongtaek, Korea, May 20, 2022. [REUTERS]

Samsung Electronics will be given a subsidy of $6.4 billion for its $45 billion chip investment in Texas, the U.S. Commerce Department announced Monday, making the Korean tech giant the recipient of the biggest grant under the CHIPS Act relative to the investment.

Intel was earlier granted $8.5 billion for its $100 billion investment and TSMC $6.6 billion for its $65 billion investment, putting the subsidy-to-investment ratio at 8.5 percent and 10.2 percent, respectively.

Samsung’s ratio comes at 14.2 percent.

“I’m pleased to announce a preliminary agreement between Samsung and the Department of Commerce to bring Samsung’s advanced semiconductor manufacturing and research and development to Texas,” said U.S. President Joe Biden in a statement on Monday.

“This announcement will unleash over $40 billion in investment from Samsung, and cement central Texas’ role as a state-of-the-art semiconductor ecosystem, creating at least 21,500 jobs.”

Samsung Electronics upped its investment in the United States by more than twofold from the previously announced $17 billion to $45 billion with a plan for execution through 2030. In addition to the first plant currently under construction in Taylor, Texas, the electronics powerhouse will add a second plant, advanced packaging facilities and a research and development center to form a chip hub there.

The first plant will start mass production of two- and four-nanometer chips from 2026 and the second one from 2027.

A number of clients have already been publicized for the first plant, including AI chip designers Groq and Tenstorrent.

The additional investment by Samsung will also be spent on expanding its existing facilities in Austin, Texas.

The $45 billion U.S. investment adds to a handful of capital expenditures already promised by Samsung Electronics.

It has committed 360 trillion won ($260 billion) to the construction of a chip cluster in Yongin, Gyeonggi through 2047 to build six plants. It has also announced an investment of $280 million in a chip R&D center in Yokohama, Japan that is expected to open its doors this year.

SK hynix is also participating in the Biden administration’s effort to onshore the chip manufacturing supply chain to U.S. soil.

Earlier this month, SK hynix announced a $3.9 billion investment in Indiana to build an advanced chip packaging plant and R&D facilities.

The Biden administration’s chip ambitions aim to elevate the market share of U.S.-made cutting-edge chips to 20 percent by 2030.┬áThe CHIPS Act, which was signed into law in 2022, has allocated $39 billion for direct grants to chipmakers establishing plants in the United States.

Gina Raimondo, the commerce secretary, previously said that over 600 chipmakers filed for subsidies worth more than $70 billion, which raised concerns that Samsung Electronics would not receive the amount originally promised by the federal government.

“Today’s announcement of Samsung’s investment in the United States is another example of how my Investing in America agenda and the U.S.-ROK Alliance is creating opportunity in every corner of the country,” Biden said in the Monday statement, referring to Korea by the initialism for the Republic of Korea.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]

7,452 Followers
Follow