Biden administration to grant Samsung a $6.6 bn subsidy for Texas chip expansion
samsung
The Biden administration has decided to award the South Korean tech giant Samsung $6.6 billion subsidy to strengthen domestic semiconductor production.
The funds are designated to expand Samsung's chip output in Taylor, Texas, Reuters reported, citing sources familiar with the matter revealed.
The announcement will be made by Commerce Department Secretary Gina Raimondo, next week.
This subsidy is intended to support the construction of four facilities in Taylor.
These include a $17 billion chipmaking plant announced by Samsung in 2021, an additional factory, an advanced packaging facility, and a research and development centre.
Notably, Samsung's investment in the US will more than double, soaring to over $44 billion as part of this deal.
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This recent grant positions Samsung's subsidy as the third-largest within the program, trailing behind Taiwan's TSMC.
TSMC was recently awarded $6.6 billion and had made plans to expand its investment to $65 billion by 2030, including the addition of a third factory in Arizona.
The Biden administration's subsidy for Samsung comes as part of a broader initiative to enhance domestic chip production.
This move aims to attract capital that might otherwise have been invested in manufacturing plants in China and neighbouring regions.
In 2022, Congress sanctioned the Chips and Science Act, allocating $52.7 billion for research and manufacturing subsidies.
Additionally, lawmakers approved $75 billion in government loan authority.
However, Samsung has indicated it will not be availing any loans for this expansion.
The Chips and Science Act indicates a major shift to reduce US dependence on China and Taiwan in semiconductor manufacturing.
Recent data from the Semiconductor Industry Association reveals a decline in the US's share of global semiconductor manufacturing capacity from 37 per cent in 1990 to just 12 per cent in 2020.
While TSMC and Intel have chosen to expand their production capabilities in Arizona, a crucial swing state, Samsung's expansion in Texas—a traditionally Republican stronghold—is perceived as potentially less advantageous for President Biden's electoral prospects.
Despite this, Governor Greg Abbott of Texas has been invited to attend the subsidy announcement event, although President Biden will not be present.
(With inputs from Reuters)