Samsung plans $17 billion chip-making plant in Texas

The year of historic spending for the semiconductor industry continues with the news that Samsung is set to announce it will build a US$17 billion chip plant in Taylor, Texas. This news will become official at 5pm local time, as part of the state governor’s scheduled “economic address,” reveals the WSJ. Current estimates are that the new Samsung facility will be up and running towards the end of 2024.

Insiders “familiar with the matter” tipped off the WSJ about this huge investment by Samsung into the US economy. Tech and business watchers will be very aware of President Biden’s push for an expansion in US semiconductor production, and it looks like it will be going full steam ahead when we add this Samsung news to the already set in stone projects/investments by the likes of Intel and TSMC. All the companies set on this course get generous government / state subsidies and tax breaks. In the case of Samsung in Texas, it is apparently going to benefit from property tax breaks of over 90 per cent for the next 10 years, with the write-offs declining in the following decades. As well as the semiconductor production and expertise injection into the US, there should be 1,800 high-skilled jobs for Texans once the facility is up and running.

Samsung has had a presence in Texas for years, so it is quite natural for it to make a major investment in this state. The South Korean tech giant reportedly considered other locations in the US, including Arizona, Florida, and New York, but Texas had the best incentives package, according to Reuters. Some background info about the specific location (Taylor) is that it is a town in Williamson County, with a population of 17,000, located about 30 miles from Austin. Samsung has long had a presence in Austin, but the Taylor facility with 1,200 acres is said to be much larger.

Semiconductor industry spending in 2021

Samsung has plans to invest >$205 billion over the next three years, TSMC plans to spend >$100 billion over the next three years, and Intel had plans to spend >$100 billion in the US and Europe over the next decade. Remember that Samsung doesn’t just make processors, it is a big contributor to the DRAM, NAND, and other semiconductor industries too. Its specific purpose for the Texan plant is said to be for the output of “advanced logic chips.”

Chip shortage end in sight?

No one will deny we are in an unprecedented chip drought, even though some areas of the industry (line NAND) don’t seem to be badly affected at all. Club386 recently reported on Adata’s chairman discussing DDR5 shortages, where he shared his expectations that DDR5 supplies would be ample by next summer. One worry that the semiconductor giants must have is that by the time all these mega factories go online in the next three to four years, they will be facing the problem of a supply glut, with all the problems that creates for such businesses.