The Biden administration will provide up to $6.4 billion in grants to Samsung, one of the world’s largest chipmakers. This is the latest in a series of awards designed to support domestic production of cutting-edge semiconductors.
The money will help South Korea’s Samsung finance its new chip production center in Taylor, Texas, and expand an existing site in nearby Austin. Samsung will now build an additional manufacturing facility and upgrade a facility under construction in Taylor. It will increase its investment in Texas to about $45 billion from the $17 billion it announced more than two years ago, administration officials said Sunday.
Federal officials said the grants would help create a U.S. center for the development and production of cutting-edge semiconductors. In addition to making chips, Samsung will now build a research and development facility in Taylor as well as a modern factory for packaging them, the final step before semiconductors can be used in electronic systems.
The announcement follows other awards federal officials have given to semiconductor makers in recent weeks. The initiative is funded by the CHIPS Act, which a bipartisan group of lawmakers passed in 2022 to bolster domestic supplies of semiconductors, the vital components that power everything from phones and computers to cars and weapons systems. The law provided $39 billion to the Commerce Department to give to chipmakers as an incentive to build and expand factories in the United States.
The effort is intended to help reverse a decades-long decline in the U.S. share of global chip manufacturing. Although semiconductors were invented in America, only about 10 percent of the world’s chips are currently made in the United States.
The Samsung grant is the third major award aimed at increasing U.S. production of the most sophisticated semiconductors. Last week, federal officials announced they would provide up to $6.6 billion in grants to Taiwan Semiconductor Manufacturing Company, the leading maker of advanced chips. The government also announced last month that Intel, a Silicon Valley chipmaker, would receive up to $8.5 billion in grants, which officials said was the largest single grant under the new program.
Both Samsung and TSMC have committed to producing two-nanometer chips in the United States in the coming years using what is currently the world’s most advanced production technology.
Samsung’s investment also includes the construction of a new modern packaging facility. When packaged, chips are typically encased in combinations of plastic and metal that allow them to connect to other devices in a system. New packaging technologies have become an industry focus as more companies have moved to bundling multiple small chips – sometimes called chiplets – into a package to boost computing power, rather than trying to pack more power into each semiconductor .
In addition, Samsung will build a research and development facility to study advances in manufacturing processes that give chips processing power and storage capacity. Of the largest chipmakers, only Intel is currently conducting such research in the United States. Federal officials view Samsung’s new research and development facility as critical to ensuring the country’s access to cutting-edge developments in the field, senior Biden administration officials said.
As part of the award, Samsung will also supply chips directly to the Defense Department. The Austin factory expansion is intended to support production of chips used in industries critical to national security, including aerospace, defense and automotive.
In addition to receiving the grants, Samsung is expected to take advantage of federal tax credits that could cover 25 percent of the cost of building and equipping the Texas factories with production equipment.
Samsung’s award brings the total announced federal grants to over $23 billion. GlobalFoundries, Microchip Technology and BAE Systems received the top three awards.
The pandemic sparked a global semiconductor shortage that crippled major industries and shed light on vulnerabilities in the domestic chip supply chain, motivating lawmakers to pass the CHIPS Act.
Federal officials view the lack of domestic manufacturing capacity as a major risk to national security since the components power missiles, satellites and fighter jets. State-of-the-art semiconductors are also critical to major technology industries such as artificial intelligence.
Gina Raimondo, the trade secretary, emphasized that much of the semiconductor supply chain – from research and development to packaging – is concentrated in a few Asian countries.
“This leaves the U.S. supply chain incredibly vulnerable to disruption,” Ms. Raimondo said on Sunday. “It is unsafe and weakens our national and economic security.”
Ms. Raimondo said the new investment will help create a “state-of-the-art semiconductor ecosystem” in Texas and re-establish the United States as a leader in the production of the most advanced semiconductors. In February, Ms. Raimondo said new investments would put the United States on track to produce about 20 percent of the world’s most advanced logic chips by the end of the decade. Currently, the United States does not produce any.
In November 2021, Samsung first announced the construction of a $17 billion semiconductor factory in Taylor, responding to a push by the Biden administration and US customers to ramp up chip production in the US. The company will now expand the production capacity of the facility. In addition to four-nanometer chips, the first facility will now also produce two-nanometer chips. Samsung is expected to open the first facility in 2026, administration officials said.
The second factory will also make two-nanometer chips and is expected to begin production in 2027, according to authorities. The research and development facility is also scheduled to open in 2027, and the advanced packaging facility is scheduled to open in 2028.
Lael Brainard, director of the National Economic Council, said the Samsung prize was the “third and final leg” of the president’s plan to bring cutting-edge chip manufacturing back to the United States. About $40 million in grants will be provided to the company to develop and train its employees, Ms. Brainard said. Samsung’s investment is expected to create more than 4,500 manufacturing jobs and at least 17,000 construction jobs, federal officials said.
Similar to the other award winners, Samsung must reach certain milestones before payments can be made.
Samsung occupies an unusually influential position in the industry because it supplies two major types of semiconductors. It is the largest maker of memory chips that store data in smartphones, computers and other products. The company also produces and develops logic chips – a category that also includes processors that perform calculations in electronic hardware. And the company offers a service that makes such chips to order for other companies.
Most of Samsung’s factories are located in South Korea. But in 1996, the company built a plant in Austin that initially produced memory chips and later switched to logic chips for products like Apple’s iPhone. In recent years, Apple has often turned to TSMC to produce Apple-designed chips, although Samsung also has some of the most advanced production processes in the industry.
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2024-04-15 11:29:42
www.nytimes.com
