US to award Samsung up to US$6.6 billion chip subsidy for Texas expansion: sources

THE Biden administration plans to announce it is awarding more than US$6 billion to South Korea’s Samsung next week to expand its chip output in Taylor, Texas, as it seeks to ramp up chipmaking in the US, two sources familiar with the matter said.

The subsidy, which will be unveiled by Commerce Department Secretary Gina Raimondo, will go towards construction of four facilities in Taylor, including one US$17 billion chipmaking plant that Samsung announced in 2021, another factory, an advanced packaging facility and a research and development centre, one of the sources said.

It will also include an investment in another undisclosed location, the source said, adding that Samsung will more than double its US investment to over US$44 billion as part of the deal.

The Commerce Department and Samsung declined to comment. Texas Governor Greg Abbott’s office did not respond to requests for comment.

One of the sources said it would be the third largest of the programme, just behind Taiwan’s TSMC, which was awarded US$6.6 billion on Monday (Apr 8) and agreed to expand its investment by US$25 billion to US$65 billion and to add a third Arizona factory by 2030.

The announcement will cap off a string of major Chips and Science grants in quick succession as the US seeks to expand domestic chip production and lure away capital that might have been used to build plants in China and the region.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Congress in 2022 approved the Chips and Science Act to boost domestic semiconductor output with US$52.7 billion in research and manufacturing subsidies. Lawmakers also approved US$75 billion in government loan authority, but one of the sources said Samsung plans to take no loans.

The Chips Act’s goal is to reduce reliance on China and Taiwan, as the share of global semiconductor manufacturing capacity in the US has fallen from 37 per cent in 1990 to 12 per cent in 2020, according to the Semiconductor Industry Association.

US President Joe Biden will not attend the event, the two sources said. He faces a tough fight to win a second term in November against former president and Republican rival Donald Trump. Greg Abbott, the Republican governor of Texas was invited to attend, one of the sources added.

While both TSMC and Intel, which was awarded US$8.5 billion to expand its US chip output last month, will expand production in the key swing state of Arizona, Samsung’s expansion in reliably Republican Texas is seen as less likely to help Biden at the polls. REUTERS