Samsung says new plant in Taylor, Texas, will help ease global chip crunch

 Samsung Electronics Co. said Wednesday it has selected the city of Taylor in Texas as the site of its new US$17 billion chip fabrication plant, a move to boost production amid a global chip shortage.

The decision came five months after the tech giant announced a plan to build a second, next-generation chip plant in the United States, and as the chip supply crunch caused global automobile and consumer electronics companies to slash their production.

Samsung said it had considered multiple factors, including “the local semiconductor ecosystem, infrastructure stability, local government support and community development opportunities.” Also the proximity to its current manufacturing site in Austin, about 25 kilometers southwest of Taylor, will enable “the two locations to share the necessary infrastructure and resources,” it said.

The move will help Samsung lay “the groundwork for another important chapter in our future,” said Kim Ki-nam, vice chairman and CEO of Samsung’s device solutions division.

“With greater manufacturing capacity, we will be able to better serve the needs of our customers and contribute to the stability of the global semiconductor supply chain,” he said.

The new investment will also bring “more jobs” and support “the training and talent development of local communities,” Kim said, as “Samsung celebrates 25 years of semiconductor manufacturing in the U.S.”

It will be the largest foreign direct investment in Texas on record, according to the office of the Texas Gov. Greg Abbott.

Samsung’s new facility will “bring countless opportunities for hardworking Central Texans and their families and will play a major role in our state’s continued exceptionalism in the semiconductor industry,” Abbott said.

It had been widely anticipated that the world’s largest memory chip maker would build the new chip plant in Taylor due largely to its generous tax incentive packages worth millions of dollars.

Construction will begin in the first half of next year, with the mass production to begin in the latter half of 2024, Samsung said.

Samsung’s Austin plant, also known as Line S2, manufactures products that include radio frequency integrated circuits, display driver integrated circuits, solid state drive controllers, image sensors and other microprocessors using nodes from 14 nanometers to 65 nanometers.

Lee Jae-yong, vice chairman of Samsung Electronics, recently met key U.S. officials and business partners, including Microsoft CEO Satya Nadella and Moderna chairman Noubar Afeyan, to discuss chip shortages and other business issues during his trip to the U.S.

With the decision, the tech giant has joined a list of global semiconductor companies rushing to expand semiconductor capacity to meet growing demand.

In September, Intel broke ground on two plants in Arizona and is widely expected to announce the location for a planned manufacturing campus by the end of the year. Taiwan Semiconductor Manufacturing Co. (TSMC) is building a plant in Arizona and is said to be considering building more in the U.S.

By building a new fabrication plant on land of more than 5 million square meters in the U.S., Samsung is doubling down on contract chip manufacturing.

According to analyst firm TrendForce, Samsung ranked No. 2 in the global foundry market with a 17.3 percent market share in the second quarter, trailing the dominant top player TSMC, which held 52.9 percent.

A growing number of big tech companies, such as Apple and Google, have already started to design their own chips and have acquired fabless companies to gain a competitive advantage in strategic materials, a major shift that adds more importance to external foundries.

Samsung and TSMC are predicted to finish construction of their U.S. fabrication plants by 2024, with competition likely to intensify to secure new customers and to offer them thinner, faster and more efficient chips.

Samsung is expected to apply the 5nm chipmaking process — the most advanced technology yet — in its new U.S. foundry. It aims to deploy gate-all-around (GAA) technology, which enables significant improvement in performance with less operating power, on the 3 nm process in the first half of next year.