The US Department of Commerce is set to provide Samsung Electronics with $6.4 billion in direct financing to support the construction of two chip plants and the expansion of another facility in Texas. Officials signed a preliminary non-binding memorandum of understanding with the company, they announced on April 15.
The funding is to support more than $40 billion that Samsung is investing in building a pair of state-of-the-art semiconductor manufacturing plants, or fabs, in addition to research and packaging facilities for chips in Taylor, Texas, and in expanding an existing factory in Austin, the Commerce Department said. In addition to direct funding, Samsung said it plans to claim an investment tax credit that covers up to 25 percent of certain capital costs.
“We are not only expanding the production facilities; we are strengthening the local semiconductor ecosystem and positioning the US as a global semiconductor manufacturing destination,” Kye Hyun Kyung, president and CEO of Samsung Electronics’ Device Solutions Division, said in a statement.
Plans call for 6 million square feet of buildings on the Taylor site, designed by Jacobs. Yates Construction Co. began work in July 2022. The first plant is expected to be operational in 2026.
Details on the Austin expansion project were not immediately available. The plant, built in 1996, is based on Samsung’s Hwaseong semiconductor plant in Korea and includes 2.8 million square feet of buildings with two factories, according to the company.
The projects combined are expected to add more than 17,000 construction jobs, according to the Commerce Department.
Public funding to support the projects comes from the CHIPS and Science Act of 2022. The law set aside $39 billion to incentivize the construction, expansion and modernization of semiconductor facilities as part of an effort to strengthen chip manufacturing in the US.
The Biden administration had positioned the move as critical to both the economy and national security because chips are widely used in consumer goods, telecommunications equipment and military equipment.
“Proposed CHIPS investments like the ones we’re announcing today will be a catalyst for continued private sector investments to help ensure the long-term stability we need to put America at the top of our semiconductor supply chain and to safeguard a strong and resilient ecosystem here at home,” U.S. Commerce Secretary Gina Raimondo said in a statement.
The chips manufactured by Samsung at the Texas plants would be for artificial intelligence, high-performance computing and 5G communications. The preliminary terms also include a commitment for Samsung to work with the US Department of Defense on the Austin facility.
The announcement of the preliminary agreement with Samsung came a week after Commerce Department officials said they had reached a similar deal with TSMC to provide $6.6 billion to support its fabled projects in Arizona. The CHIPS program has also offered $8.5 billion to Intel for its projects in Arizona, New Mexico, Ohio and Oregon; $1.5 billion to GlobalFoundries for projects in New York and Vermont; and smaller funding amounts for BAE Systems Inc. and Microchip Technology Inc.
