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 announced on April 15 that they had signed a preliminary non-binding memorandum of understanding with the company.
The funding is expected 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 of chips in Taylor, Texas, and in the expansion of an existing manufacturing industry. facility in Austin, Commerce Department officials said. In addition to the direct financing, Samsung also indicated that it plans to claim an investment tax credit that covers up to 25% of certain capital costs.
The planned Taylor facility includes 6 million square feet of buildings. Construction on the Jacobs-designed facility began in July 2022 with general contractor Yates Construction Co. The first plant is expected to start operating in 2026.
Details on the Austin expansion project were not immediately available. The site was originally built in 1996. It is modeled after Samsung’s Hwaseong semiconductor site in Korea and includes 2.8 million square feet of two-story buildings, according to the company.
The projects combined are expected to include more than 17,000 construction jobs, Commerce Department officials said.
“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.
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 a effort to bring chip manufacturing back to the US.
The Biden administration had positioned the move as critical to both the economy and national security because of the widespread use of chips in consumer goods, telecommunications equipment and military equipment. Chips made by Samsung at the Texas plants would be used in technologies such as artificial intelligence, high-performance computing and 5G communications, US Commerce Secretary Gina Raimondo said in a statement. The preliminary terms also include a commitment for Samsung to work with the US Department of Defense on the Austin facility.
“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,” said Raimondo.
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.
