The Biden administration plans to award up to $6.4 billion in subsidies to Samsung, one of the world's largest chip makers, the latest in a series of awards aimed at boosting domestic production of cutting-edge semiconductors. becomes.
The funding will help South Korean company Samsung fund a new chip manufacturing site in Taylor, Texas, and expand an existing site in nearby Austin. Samsung plans to build additional manufacturing plants and upgrade the facility it is currently building in Taylor. Administration officials announced Sunday that they will increase investment in Texas to about $45 billion, up from $17 billion announced more than two years ago.
Federal officials said the grant will help create a hub for the development and production of cutting-edge semiconductors in the United States. Apart from making chips, Samsung plans to build a research and development facility in Taylor and an advanced factory for packaging, the final step before semiconductors can be used in electronic systems.
The announcement follows other awards given to semiconductor manufacturers by federal authorities in recent weeks. The effort is part of the CHIPS Act, passed in 2022 by a bipartisan group of lawmakers to strengthen the domestic supply of semiconductors, critical components that power everything from phones and computers to cars and weapons systems. Funded. Under the bill, the Commerce Department awarded $39 billion in incentives to semiconductor manufacturers to build and expand factories in the United States.
The effort aims to reverse decades of decline in the U.S. share of global chip manufacturing. Although semiconductors were invented in America, only about 10 percent of the world's chips are currently manufactured there.
Samsung's subsidy is the third major award aimed at increasing production of America's most sophisticated semiconductors. Last week, federal officials announced they would award up to $6.6 billion in subsidies to Taiwan Semiconductor Manufacturing Company, a major maker of cutting-edge chips. The administration announced last month that Silicon Valley chipmaker Intel would receive up to $8.5 billion in subsidies, which officials said would be the single largest subsidy under the new program.
Both Samsung and TSMC have committed to producing 2-nanometer chips in the United States over the next few years using the most advanced production technology in the world today.
Samsung's investment also includes the construction of a new advanced packaging facility. Packaging typically involves wrapping the chip in a combination of plastic and metal so that it can be connected to other devices in the system. New packaging technologies are a focus for the industry, with companies bundling multiple small chips (also known as chiplets) into a single package to increase computing power, rather than cramming more functionality into each semiconductor. increasing.
Additionally, Samsung plans to build an R&D facility to study advances in manufacturing processes that add computing power and storage capabilities to chips. Among the largest chipmakers, Intel is currently the only one conducting such research in the United States. Federal officials believe Samsung's new research and development facility is critical to ensuring access to cutting-edge developments in the field, Biden administration officials said.
As part of the award, Samsung will supply 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 subsidy, Samsung plans to apply for a federal tax credit that could cover 25% of the cost of building the Texas factory and equipping it with production equipment.
Samsung's award brings the total amount of federal grants announced to more than $23 billion. GlobalFoundries, Microchip Technology and BAE Systems were the recipients of his first three awards.
The pandemic has caused a global semiconductor shortage, crippled key industries, and highlighted the fragility of the nation's chip supply chain, motivating lawmakers to pass the CHIPS Act.
Federal officials view the lack of domestic manufacturing capacity as a significant national security risk, given that these parts power missiles, satellites and fighter jets. Cutting-edge semiconductors are also critical to key technology industries such as artificial intelligence.
Commerce Secretary Gina Raimondo emphasized that much of the semiconductor supply chain, from research and development to packaging, is concentrated in a few countries in Asia.
“That leaves the U.S. supply chain highly vulnerable to disruption,” Raimondo said Sunday. “It is not safe and undermines national and economic security.”
Raimondo said the new investment will help build a “state-of-the-art semiconductor ecosystem” in Texas and re-establish the United States as a leader in cutting-edge semiconductor production. Raimondo said in February that new investments would put the United States on track to produce about 20% of the world's most advanced logic chips by the end of this decade. Currently, nothing is produced in the United States.
Samsung first announced in November 2021 that it would build a $17 billion semiconductor factory in Taylor in response to a push by the Biden administration and U.S. customers to expand chip production in the United States. The company plans to upgrade the facility's manufacturing capacity in the future. In addition to 4-nanometer chips, the first factory will also produce 2-nanometer chips. Samsung plans to open its first facility in 2026, government officials said.
The second factory will also manufacture 2-nanometer chips, with production scheduled to begin in 2027, according to people familiar with the matter. A research and development facility is also scheduled to open in 2027, and an advanced packaging facility is scheduled to open in 2028.
National Economic Council Chairman Lael Brainard said the Samsung award is the “third and final leg” of the president's plan to bring cutting-edge semiconductor manufacturing back to the United States. About $40 million in grants will be set aside for workforce development and training, Brainerd said. Federal officials say Samsung's investment is expected to create more than 4,500 manufacturing jobs and at least 17,000 construction jobs.
Like other award winners, Samsung must meet certain milestones before payment can be made.
Samsung has unusual influence in the industry by supplying two major types of semiconductors. The company is the largest maker of memory chips that store data in smartphones, computers and other products. However, the company also manufactures and designs Logic's chips. This category includes processors that process calculations in electronic hardware. The company also provides a service to order these chips from other companies and manufacture them.
Most of Samsung's factories are located in South Korea. But the company built a facility in Austin in 1996 that initially produced memory chips, but later moved to logic chips for products such as Apple's iPhone. In recent years, Apple has often turned to TSMC to manufacture Apple-designed chips, but Samsung also boasts some of the most advanced production processes in the industry.