Samsung to build advanced chip plant in Texas

Seoul

SAMSUNG Electronics Co has decided to build an advanced US chip plant in Texas, a win for the Biden administration as it prioritises supply chain security and greater semiconductor capacity on American soil.

South Korea's largest company has decided on the city of Taylor, roughly 48km from its existing giant manufacturing hub in Austin, a person familiar with the matter said. A Samsung representative said it hadn't made a final decision and declined further comment.

Samsung is hoping to win more American clients and narrow the gap with Taiwan Semiconductor Manufacturing Co. Its decision, which came months after de facto leader Jay Y. Lee was released from prison on parole, follows plans by TSMC and Intel Corp to spend billions on cutting-edge facilities globally.

The industry triumvirate is racing to meet a post-pandemic surge in demand that has stretched global capacity to the maximum, while anticipating more and more connected devices from cars to homes will require chips in future.

The new plant will augment Samsung's already sizeable presence in Austin, where it has invested about US$17 billion to date on a sprawling complex that houses more than 3,000 employees and fabricates some of the country's most sophisticated chips.

Samsung is planning to invest another US$17 billion and create about 1,800 jobs over the first 10 years, according to documents the company submitted to Taylor officials.

Korea's Yonhap news agency and the Wall Street Journal had reported earlier on Taylor's selection.

The Asian giant is taking advantage of a US government effort to counter China's rising economic prowess and lure home some of the advanced manufacturing that in past decades has gravitated toward Asia.

That ambition crystallised after a global chip shortage hobbled the tech and auto industries, cost companies billions in lost revenue and forced plants to furlough workers, exposing US vulnerability to diversified supply chains.

In June, US President Joe Biden laid out a sweeping effort to secure critical supply chains, including a proposed US$52 billion to bolster domestic chipmaking.

His administration has repeatedly voiced the need to increase chip production in the United States, saying that was the best way to compete with China and mitigate supply chain disruptions like the one stemming from Covid 19. Last month, the US created an "early alert system" to detect Covid-related shocks. And it asked producers and consumers of semiconductors to complete a survey about inventories, demand, and delivery systems, to identify potential issues.

Recently, Intel's troubles ramping up on technology and its potential reliance in the future on TSMC and Samsung for at least some of its chipmaking have underscored the extent to which Asian giants have pulled ahead in recent years.

The administration discouraged Intel from pursuing plans to operate a factory in Chengdu, China to manufacture silicon wafers.

Samsung adds to a growing list of companies moving to or expanding in Texas. In the last year, electric carmaker Tesla Inc said it would move headquarters to the state, as did Oracle Corp and Hewlett Packard Enterprise Co.

Samsung itself has been accelerating investment activity since Lee was released from jail, where he was serving time for corruption. It unveiled a commitment to bolster South Korea's economy by spending 240 trillion won (S$275 billion) and expand hiring to 40,000 people over the next three years.

It's going head-to-head in Intel's backyard with TSMC, which is on track to start production on its own US$12 billion chip plant in Arizona by 2024.

Samsung is trying to catch TSMC in the so-called foundry business of making chips for the world's corporations - a particularly pivotal capability given a deepening shortage of semiconductors in recent months. BLOOMBERG