South Korean tech giant Samsung Electronics said it would build a $17bn chip plant outside Austin, Texas, to make advanced chips used in phones, cars and other electronic devices.
The plant would create 2,000 high-tech jobs with construction to begin in the first half of next year, and production due to start in the second half of 2024, Samsung said in a statement on Wednesday. It would also create at least 6,500 construction jobs, Texas Governor Greg Abbott said in a press release.
The world’s biggest memory chipmaker and second-largest contract chip manufacturer had also considered sites in Arizona and New York for the plant, which will be much bigger than its only other US chip plant in Austin.
Samsung chose Texas again due to its infrastructure, government support and proximity to its existing plant, it said.
A shortage of chips has emerged as both a business obstacle and a serious national-security concern for the United States. Short supplies of semiconductors kicked off by COVID-era shutdowns have hampered production of new vehicles and electronic devices for more than a year.
New questions of economic and national security are also at stake since many US companies are dependent on chips produced overseas, particularly in Taiwan, which China has long claimed as its territory.
“It’s a concentration risk, a geopolitical risk” to be so reliant on Taiwan for much of the world’s chip production, said Nina Turner, an analyst at IDC. She said the current shortages will likely subside, but there will be a long-term demand for chips as more and more everyday products rely on them.
Many chipmakers are spreading out their manufacturing operations, now concentrated in Asia, in response to the shortages, which have taken a toll on sectors from automakers to the video game industry.
Abbott, flanked at a press conference by Samsung Vice Chairman of Electronics, Kinam Kim, and US Senator John Cornyn of Texas, said the company’s decision to pick Texas was a testament to the state’s economic environment built on low taxes, reasonable regulations and robust infrastructure.
Texas last February suffered a multi-day, widespread power outage, causing some 300-400 billion won ($254-$339m) in damages to Samsung’s existing chip plant in Austin.
“I’m extremely confident that the power grid is stable, resilient and reliable,” Abbott said when asked about the electricity supply for the plant.
The new site in Texas’s Williamson County, which comprises the city of Taylor, offered the best incentives package of the sites Samsung was considering, sources previously told the Reuters news agency.
Abbott’s office on Tuesday said Samsung would also receive a $27 million grant by the Texas Enterprise Fund for its job creation. His office did not immediately respond to requests for additional details on incentives Samsung received.
US President Joe Biden’s administration has promised billions of dollars in federal funding to boost chip manufacturing and research to ensure it has the edge over China in advanced technologies and to address shortages for critical industries like autos.
Senator Cornyn on Tuesday called on the Biden administration to invest more money to attract chip manufacturers to the US, calling it a “national security imperative”.
“If China continues to saber-rattle, the majority of the world could be at their mercy when it comes to the supply of critical semiconductors,” Cornyn said.
Samsung’s Kim, in a statement, thanked the Biden administration for “creating an environment that supports companies like Samsung as we work to expand leading-edge semiconductor manufacturing in the U.S.”
“We also thank the administration and Congress for their bipartisan support to swiftly enact federal incentives for domestic chip production and innovation.”
Samsung has not specified what the new plant will make beyond advanced logic chips, which can be used to power mobile devices and autonomous vehicles.
Analysts said it would likely make cutting-edge chips of 5-nanometres or less, using machines made by the Netherland’s ASML, for large clients like Qualcomm.
Such chips can handle more data per area than the 14- and 28-nanometre chips Samsung’s existing US plant in Austin mainly makes.