U.S. unveils US$6.4 bln in CHIPS Act grants to Samsung Electronics

April 15, 2024

The U.S. government announced a plan Monday to award Samsung Electronics Co. up to US$6.4 billion in grants to support the South Korean tech giant’s chipmaking investment in central Texas, as it strives to strengthen domestic semiconductor production.

The Commerce Department said it has reached a nonbinding preliminary agreement with Samsung to provide the grants under the CHIPS and Science Act to back the company’s expected investment of more than $40 billion in the establishment of a “leading-edge semiconductor ecosystem” in the state.

The proposed investment would be split across multiple projects at two separate locations in Texas, including the construction of an advanced manufacturing cluster in Taylor and the expansion of the existing facilities in Austin.

The subsidy for Samsung is the third-largest one under the CHIPS Act program after the U.S. unveiled up to $8.5 billion in grants and $11 billion in loans for Intel Corp., and up to $6.6 billion in grants and about $5 billion in loans for TSMC Arizona Corporation, a TSMC subsidiary.

President Joe Biden touted Samsung’s investment in light of the decadesold alliance between South Korea and the United States, while noting that the investment would support the creation of at least 21,500 jobs.

“Today’s announcement of Samsung’s investment in the United States is another example of how my Investing in America agenda and the U.S.-ROK alliance is creating opportunity in every corner of the country,” he said in a statement. ROK stands for South Korea’s official name, the Republic of Korea.

He reiterated that the 2022 CHIPS Act is designed to restore U.S. leadership in semiconductor manufacturing and help maintain access to chips.

“Well before the law was passed, I was working to address our supply chain vulnerabilities,” he said. “This included my trip to the Republic of Korea, where I visited Samsung’s Pyeongtaek campus to see one of the largest semiconductor manufacturing facilities in the world.”

Samsung’s proposed investment in Taylor would construct a comprehensive advanced manufacturing cluster, including two leading-edge logic foundry fabs focused on mass production of 4 nanometer (nm) and 2 nm process technologies, a research and development fab dedicated to technology generations ahead of nodes currently in production, and an advanced packaging facility.

Its investment in Austin is dedicated to expanding the existing facilities to support the production of leading fully depleted silicon-on-insulator process technologies for U.S. industries, including aerospace, defense and automotive, according to the department.

“To meet the expected surge in demand from U.S. customers, for future products like AI chips, our fabs will be equipped for cutting-edge process technologies and help advance the security of the U.S. semiconductor supply chain,” Kye Hyun-kyung, president and CEO of the device solutions division at Samsung Electronics, was quoted as saying.

The CHIPS Act sets aside $39 billion in incentives to encourage chipmakers to build, expand or modernize semiconductor facilities in the U.S. The Commerce Department plans to invest about $28 billion of the total in leading-edge chipmakers, like Samsung.

The Biden administration has been pushing for the initiative to reinvigorate domestic chip manufacturing following semiconductor shortages during the COVID-19 pandemic that laid bare supply chain vulnerabilities accentuated against the backdrop of a hardening Sino-U.S. rivalry.

Having invented the semiconductor, the U.S. produces less than 10 percent of the world’s chips and none of the most advanced ones.

Investments by Samsung and other firms put the U.S. on track to deliver on its plan to produce about 20 percent of the world’s leading-edge logic chips by 2030, the department said.

Besides Samsung, Intel Corp. and TSMC Arizona Corporation, GlobalFoundries, the American subsidiary of BAE Systems Plc and Microchip Technology Inc. have also been selected as beneficiaries.