Samsung to build $17bn semiconductor factory in Texas

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Samsung has said it will build a $17bn (£12.7bn) semiconductor factory in Texas amid a global shortage of chips used in cars, phones and other electronic devices.

The plant, located just outside Austin, will be the South Korean company’s largest US investment and is expected to be operational in the second half of 2024.

Samsung also considered sites in Arizona and New York for the factory, which would be much larger than its other US chip plants, also in Austin.

Samsung said the new facility will boost production of high-tech chips used for 5G mobile communications, advanced computing and artificial intelligence, and also improve supply chain resilience.

Chip shortages have become a significant commercial barrier and a serious US national-security concern. Shutdowns during the COVID-19 pandemic have created supply problems, disrupting production of new vehicles and electronic equipment for more than a year. National security also becomes an issue as many U.S. Companies rely on chips produced abroad, particularly in Taiwan, which China has long claimed as its territory.

Nina Turner, a research analyst at research firm IDC, said being so dependent on Taiwan for most of the world’s chip production was “a concentration risk, a geopolitical risk”. He said the shortage is likely to ease, but there will be long-term demand for the chips as more and more everyday products depend on them.

Samsung’s new factory announced, Governor TexasGreg Abbott: “This is the largest foreign direct investment ever made in the state of Texas.”

Samsung is one of the largest chip makers in the world, with more than 20,000 employees across the US. It said the latest announcement brings its total investment in the country to $47bn.

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The company’s vice-chair, Kinnam Kim, said it chose the site based on several factors, including government incentives and the “readiness and sustainability” of the local infrastructure.

Many chip makers are expanding their manufacturing operations in response to the deficiencies, which have taken a toll on sectors ranging from the automotive to the video game industry.

Angelo Zino, an analyst at CFRA, said: “It makes sense to make the supply chain a little more diversified geographically.” Another factor, he said, was the expectation that Congress would approve federal subsidies for the semiconductor industry to build its factories in the US, in the hope that it would bring jobs, ease future supply concerns and put the US on economic rivals such as China. will give more benefit.

The Biden administration is pushing Congress to pass the $52bn Chips Act to increase computer chip manufacturing and research. The separate legislation under consideration would create tax credits for investments in semiconductor manufacturing facilities.

Other countries have made similar efforts to make chips closer to their place of use. The European Commission said earlier in November that it could approve aid for the production of semiconductors in the 27-nation bloc.