The Biden administration will award up to $6.4 billion in grants to Samsung, one of the world’s largest chipmakers, the latest in a series of awards intended to boost domestic production of cutting-edge semiconductors.
The money will help Samsung, the South Korean company, fund its new chip manufacturing center in Taylor, Texas, and expand an existing site in nearby Austin. Samsung will now build an additional manufacturing plant and upgrade the facility under construction in Taylor. It will increase its investment in Texas to about $45 billion, up from the $17 billion it announced more than two years ago, administration officials said Sunday.
Federal officials said the grants will help create a US hub for the development and production of leading semiconductors. Besides manufacturing the chips, Samsung will now build a research and development facility in Taylor as well as an advanced factory for packaging them, the final step before semiconductors are used in electronic systems.
The announcement follows other awards made by federal officials to semiconductor manufacturers in recent weeks. The initiative is funded by the CHIPS Act, which was passed by a bipartisan group of lawmakers in 2022 to boost the domestic supply of semiconductors, the vital components that power everything from phones and computers to cars and weapons systems. . The law gave the Commerce Department $39 billion to give out in grants as incentives to chipmakers to build and expand plants in the United States.
The effort aims to help reverse a decades-long decline in the US share of global chip production. Although semiconductors were invented in America, only about 10 percent of the world’s chips are currently made in the United States.
The Samsung grant is the third major award aimed at increasing US production of the most sophisticated semiconductors. Last week, federal officials said they would award up to $6.6 billion in grants to Taiwan Semiconductor Manufacturing Company, the leading maker of the most advanced chips. The administration also announced last month that Intel, a Silicon Valley chipmaker, would receive up to $8.5 billion in grants, which officials said would be the largest grant under the new program.
Both Samsung and TSMC are committed to producing two-nanometer chips, using the world’s current most advanced production technology, in the United States in the coming years.
Samsung’s investment also includes the construction of a new advanced packaging facility. Packaging typically involves encasing the chips in combinations of plastic and metal that allow them to connect to other devices in a system. New packaging technologies have become a focal point for the industry as more companies have taken to bundling multiple small chips — sometimes called chiplets — into a single package to boost computing power instead. to try to pack more capability into each semiconductor.
In addition, Samsung will build a research and development facility that will study advances in manufacturing processes, which add computing power and storage capability to the chips. Among the largest chip manufacturers, only Intel currently conducts such research in the United States. Federal officials view Samsung’s new research and development facility as critical to ensuring the nation’s access to cutting-edge developments in the field, senior Biden administration officials said.
As part of the award, Samsung will also provide chips directly to the Department of Defense. The expansion of the Austin facility is intended to support the production of chips used in industries critical to national security, including aerospace, defense and automotive.
In addition to receiving the grants, Samsung is expected to receive federal tax credits that could cover 25 percent of the cost of building and installing production equipment at the Texas factories.
Samsung’s award brings the total announced federal grants to more than $23 billion. GlobalFoundries, Microchip Technology and BAE Systems received the first three awards.
The pandemic caused a global shortage of semiconductors that crippled key industries and highlighted vulnerabilities in the domestic supply chain for chips, prompting lawmakers to pass the CHIPS Act.
Federal officials view the lack of domestic manufacturing capacity as a major national security risk, as the components power missiles, satellites and fighter jets. Cutting-edge semiconductors are also critical for key technological industries such as artificial intelligence.
Gina Raimondo, the commerce secretary, emphasized that much of the semiconductor supply chain — from research and development to packaging — is concentrated in a few Asian countries.
“That leaves the US supply chain incredibly vulnerable to disruption,” Ms. Raimondo on Sunday. “It is unsafe and it undermines our national and economic security.”
said Ms. Raimondo said the new investment will help create a “modern semiconductor ecosystem” in Texas and re-establish the United States as a leader in the production of the most advanced semiconductors. In February, Ms. Raimondo said the new investments will put the United States on track to produce about 20 percent of the world’s most advanced logic chips by the end of the decade. Currently, the United States is doing nothing.
In November 2021, Samsung first announced it would build a $17 billion semiconductor factory in Taylor, responding to a push by the Biden administration and US customers to boost chip production in the United States. The company will now upgrade the facility’s manufacturing capacity. In addition to four-nanometer chips, the first plant will now produce two-nanometer chips. Samsung is expected to open the first facility in 2026, administration officials said.
The second plant will also make two-nanometer chips and is scheduled to open in 2027, according to officials. The research and development facility is also expected to open in 2027, and the advanced packaging facility is slated to open in 2028.
Lael Brainard, the director of the National Economic Council, said the Samsung award is the “third and final part” of the president’s plan to restore leading chip manufacturing to the United States. About $40 million in grants will be allocated for the company to develop and train its workforce, Ms. Brainard. Samsung’s investment is expected to create more than 4,500 manufacturing jobs and at least 17,000 construction jobs, federal officials said.
Like other award recipients, Samsung will need to meet certain milestones before payments can be made.
Samsung plays an unusually influential position in the industry by supplying two main types of semiconductors. It is the largest maker of memory chips, which store data in smartphones, computers and other products. But the company also makes and designs logic chips – a category that includes processors that handle calculations in electronic hardware. And the company offers a service that makes such chips to order for other companies.
Most of Samsung’s factories are in South Korea. But in 1996, the company built a facility in Austin, which initially made memory chips and later switched to logic chips for products like Apple’s iPhone. In recent years, Apple has often turned to TSMC to make Apple-designed chips, though Samsung also boasts some of the most advanced production processes in the industry.
