US grants Samsung up to US$6.4 billion in funding to produce advanced chips in Texas

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US grants Samsung up to US.4 billion in funding to produce advanced chips in Texas

“The US Department of Commerce and Samsung Electronics have signed a non-binding preliminary memorandum of terms to provide up to $6.4 billion in direct funding under the Chips and Science Act,” said a statement published by the Commerce Department.
A general view of Samsung Electronics’ semiconductor plant under construction in Taylor, Texas, on January 2, 2024. Photo: EPA-EFE
Samsung, which is the world’s largest maker of memory chips and smartphones, “is expected to invest more than US$40 billion in the region in the coming years, and the proposed investment would support the creation of over 20,000 jobs”, the agency said.

In the modern global economy, advanced semiconductors are crucial in powering everything from smartphones to fighter jets.

The global chip industry is currently dominated by just a few companies, including TSMC and US-based Nvidia.

Samsung to use chip-making tech favoured by rival in AI race

That means the US is highly dependent on Asia for chips and is vulnerable to shocks to semiconductor supply chains, especially during geopolitical crises that affect places such as Taiwan.

This has fuelled a US push to strengthen production.

The Chips and Science Act, passed in 2022, calls for tens of billions of dollars in funding to overhaul the US semiconductor industry, with the idea that making public money available for this purpose will lure private investment.

The Samsung agreement will “cement central Texas’ role as a state-of-the-art semiconductor ecosystem”, Biden said in a statement.

“These facilities will support the production of some of the most powerful chips in the world, which are essential to advanced technologies like artificial intelligence and will bolster US national security.”

South Korean chip maker Samsung Electronics’ 1-terabyte solid state drive seen in Seoul, South Korea, on April 5, 2023. Photo: Bloomberg

Under the latest agreement, Samsung will not only build a new facility to produce advanced chips, but also expand its existing plant in Texas, according to the Commerce Department.

“We’re not just expanding production facilities; we’re strengthening the local semiconductor ecosystem and positioning the US as a global semiconductor manufacturing destination,” Samsung chief executive Kyung Kye-hyun said in the Commerce Department statement.

United States Commerce Secretary Gina Raimondo attends an event in Bangkok, Thailand, on March 13, 2024. Photo: AP
The US has also awarded funding to GlobalFoundries, BAE Systems Electronic Systems and Microchip Technology under the 2022 law.

In February, Commerce Secretary Gina Raimondo expressed confidence that the United States could house the entire silicon supply chain for making advanced chips.

“The brutal fact is, the United States cannot lead the world as a technology and innovation leader on such a shaky foundation,” she said during a speech in Washington.

“We need to make these chips in America.”

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