U.S. Gives $6.4 Billion to Samsung for Making Chips in Texas

By: | May 28th, 2024

Photo by Nicolas Thomas on Unsplash

President Joe Biden’s administration has agreed to provide direct funding up to $6.4 billion to South Korea’s Samsung Electronics aiming to expand its chip production in central Texas as part of a broader effort to boost U.S. chipmaking. The funding is part of support from the 2022 Chips and Science Act, which called for tens of billions of dollars to overhaul the country’s semiconductor industry and restore the production of advanced computer chips domestically.

Today, chips become important as they are powering everything from smartphones to fighter jets. The demand is also increasing with the growth of electric vehicles, adding to the pressure to raise production. Furthermore, chips are also needed for the development of AI on national security grounds as well as in competition with China.

Accessing to advanced technology becomes a major national security concern as the U.S. dependence on chips manufactured by the world’s top contract chip manufacturer Taiwan Semiconductor Manufacturing Company (TSMC) in Taiwan, where China claims the self-governed island as its territory as well as having the right to use force to retake it. This means the U.S. is also vulnerable to shocks to semiconductor supply chains.

Under the latest agreement, Samsung is expected to invest more than $40 billion in the region in the coming years, which includes two factories that would make 4-nanometer and two-nanometer chips. In addition, it not only would be a factory dedicated to research and development, but also a facility for the packaging chip components. The first factory is planned to start production in 2026, and the second in 2027. This is also expected to create over 20,000 jobs.

In the effort to avoid the prospect of shortages of semiconductors, the Biden administration unveiled his biggest investment yet in the sector with almost $20 billion in grants and loans for Intel’s domestic chip-making plants in March. 

On the other hand, a coming preliminary agreement with TSMC would directly grant the company up to $6.6 billion in funding and up to another $5 billion in loans under the CHIPS Act to build out its American production. Another global chip firm also quartered in the U.S. is NVIDIA.

Ashton Henning

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