Biden Is Pushing Ahead

The U.S. government is awarding Samsung Electronics a grant of up to $6.4 billion to construct chip-making facilities in Texas, signaling a concerted effort by the Biden administration to bolster semiconductor manufacturing within the country.

  • Samsung intends to utilize this funding to augment its investment in Taylor, Texas, situated just outside Austin, to approximately $45 billion.
  • This investment will encompass the establishment of a second chip-making factory, an advanced chip-packaging facility, and research-and-development capabilities, as stated by the Commerce Department.
  • Notably, this commitment surpasses Samsung's initial pledge made in 2021 for the construction of a chip-making plant in Taylor.

The disbursement of the grant is contingent upon thorough evaluation by the Commerce Department, which is overseeing $39 billion of manufacturing grants under the Chips Act of 2022.

Halfway There

With Samsung's grant, the Commerce Department has now allocated a total of $23 billion this year for significant chip-making projects in the United States. According to the Commerce Department, these Samsung projects are expected to generate 17,000 construction jobs and 4,500 manufacturing jobs.

  • The Chips Act represents a pivotal component of the Biden administration's strategy to revitalize industrial policy, utilizing governmental resources to reinvigorate domestic production of semiconductor technology, deemed critical to national security and economic advancement.
  • The United States' share of global chip production has declined from over a third in the 1990s to approximately 12% in 2020, largely due to the concentration of the chip supply chain in Asia, as noted by Commerce Secretary Gina Raimondo.

Samsung, based in South Korea, holds the title of the world's largest manufacturer of memory chips and plays a significant role in the contract chip-making sector. It is among a select group of companies capable of producing the industry's most advanced logic chips, alongside Taiwan Semiconductor Manufacturing Co. and Intel.

USD 200 Billion Over 20 Years For Cutting Edge Tech

Two years ago, Samsung hinted at the possibility of investing over $200 billion in 11 new chip-making plants in Texas over the next two decades, as disclosed in filings submitted to the Texas Comptroller's Office.

  • According to the Commerce Department, Samsung's planned chip-making facilities in Taylor will focus on producing 4-nanometer and 2-nanometer chips for the firm's foundry business, slated to commence production in 2026 and 2027.
  • This facility will also engage in 2.5-D packaging techniques, which involve combining logic and memory chips into a single package to enhance the performance of chip systems for AI computing.

HBM, characterized by the stacking of multiple DRAM memory chips, has emerged as the preferred memory type for high-performance AI processor chips produced by companies like Nvidia.

Intel, TSMC And GlobalFoundries Also Benefit From These Grants

Recently, TSMC, the leading contract chip maker, secured up to $6.6 billion from the U.S. government to support its $65 billion investment in three chip factories planned for Phoenix.

  • Intel, likewise, received $8.5 billion under the Chips Act to aid in the establishment of new chip plants across four states. The Commerce Department estimates Intel's total investment in U.S. projects over the next five years to exceed $100 billion.
  • Contract chip maker GlobalFoundries also received $1.5 billion in grants in February as part of this concerted effort to bolster domestic semiconductor manufacturing.

As the disbursement of funds under the Chips Act gains momentum, Raimondo anticipates that with initiatives like Samsung's, the U.S. could produce around 20% of the world's most advanced chips by 2030.

Disclaimer

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