Samsung is putting on its cowboy hat and heading to the great state of Texas to build a massive $17 billion chip factory.
The plant, located in Taylor, about 30 miles from Austin, is set to begin operations in the second half of 2024 with the goal of stabilizing the fragile semiconductor supply chain. Samsung is already a major player in the chip-making industry, not only using in-house processors for its own products (like the Exynos SoC in Galaxy phones) but supplying them to others.
Recent reports claim Samsung could be capable of producing chips as advanced as 3 nanometers at the new plant, a big step up from the 14-nanometer nodes reportedly being produced at its smaller plant in Austin. Samsung already makes chips for Qualcomm and Nvidia and is reportedly in talks with Intel to manufacture some of its chips.
The Korean tech giant supplies some of the largest tech companies with various components including displays and memory, but the ongoing chip shortage has made processor manufacturing more lucrative. It’s why Samsung’s rivals have already announced plans to expand their chipmaking operations, with TSMC and Sony opening a $7 billion chip factory in Japan at the end of 2024, when TSMC–the world’s largest semiconductor manufacturer and Apple’s supplier–plans to open its own $12 billion plant in Arizona where it will produce 5-nanometer technology. TSMC could build as many as six factories in Arizona over a 10- to 15-year span, Reuters reports. Intel is also expanding, revealing in March that it will spend $20 billion to open two chip fabs in the same state as its rival.
Samsung choosing Texas for its operations can be viewed as a win for the Biden administration, which is pushing to bring semiconductor manufacturing to U.S. soil as a way to compete against China and alleviate supply chain shortages. The White House is actively working to pass a $52 billion bill called the CHIPS Act that would fund domestic chip manufacturing.
“In addition to our partners in Texas, we are grateful to the Biden Administration for creating an environment that supports companies like Samsung as we work to expand leading-edge semiconductor manufacturing in the U.S.,” Kinam Kim, the vice chairman and CEO of Samsung Electronics Device Solutions said in a statement. “We also thank the administration and Congress for their bipartisan support to swiftly enact federal incentives for domestic chip production and innovation.”
Samsung plans to start construction on the 1,200-acre facility next year and employ 1,800 people once the lights turn on, making it the company’s largest investment in the United States.
Chip supply shortages stemming from the covid-19 pandemic have crippled the tech industry. For consumers, it means Sony’s PS5 is almost impossible to find, car prices are through the roof, and certain products in other categories go in and out of stock.
It’s unclear when the chip shortage will improve, though Intel CEO Pat Gelsinger says he expects issues to extend into 2023. AMD CEO Lisa Su says supply will be “likely tight” but expects the shortage to continue into mid-2022. With all these chip fabs sprouting up in the next few years, we can take some comfort in knowing measures are being put in place to prevent this nightmare situation from happening again.