Samsung announces a new semiconductor facility in Texas

Samsung announces a new semiconductor facility in Texas

South Korean electronics big Samsung stated it plans to construct a $17 billion semiconductor manufacturing unit exterior of Austin, Texas, amid a international scarcity of chips used in automobiles, telephones, tablets, online game consoles and different digital units.

“This is the largest foreign direct investment in the state of Texas, ever,” Governor Greg Abbott stated in asserting the mission Tuesday.

Samsung stated it would begin constructing the plant subsequent yr and hopes to start operations in the second half of 2024. The corporate selected the positioning based mostly on authorities incentives and the “readiness and stability” of native infrastructure, Samsung Vice Chairman Kinam Kim stated throughout a press convention with Abbott.

The new facility will increase manufacturing of high-tech chips used for 5G cellular communications, superior computing and synthetic intelligence, Samsung stated.

The coronavirus pandemic is the primary issue behind the worldwide chip scarcity, in keeping with the Semiconductor Trade Affiliation, a commerce group. A surge in coronavirus instances in the Asian nations that produce most chips, mixed with a sequence of disasters together with a manufacturing unit fire and a deep freeze in Texas, has led chipmakers to provide lower than they’d usually. Additionally final yr, demand for electronics soared when many individuals began working from residence and the nation’s restricted provide of chips went to these units, the commerce group has stated.

It is a good storm that is left automakers, which additionally rely closely on semiconductors, scrambling for chips. That is driving up the price of new autos, with new-car costs hitting a file $43,355 in September, in keeping with Kelley Blue Book, which is 10% larger than one yr in the past.

Apart from Samsung, many chipmakers are spreading out their manufacturing operations in response to the chip shortages. Taiwan Semiconductor stated in April that it plans to construct a $12 billion manufacturing manufacturing unit in Arizona. Intel broke floor on two new chip factories in Arizona in September.

Final week, Ford Motor stated it is partnering with GlobalFoundries to provide extra chips for its autos. The chips from GlobalFoundries shall be initially used in Ford’s hands-free driver help and automobile battery administration programs, the businesses stated.

A number of chipmakers have signaled an curiosity in increasing their American operations if the U.S. authorities is ready to make it simpler to construct chip vegetation. Micron Expertise, for instance, stated it would make investments $150 billion globally over the subsequent decade in creating its line of reminiscence chips, with a potential U.S. manufacturing enlargement if tax credit might help make up for the upper prices of American manufacturing. 

“It makes sense for the supply chain to be a bit more diversified geographically,” Angelo Zino, an analyst at CFRA, informed the Related Press. “You’re clearly seeing some new foundry capacity plans being announced in the U.S. as well as Europe.”

Samsung is the dominant participant in the marketplace for the reminiscence chips which are key to smartphones and different gadgetry, however Zino stated the corporate can be increasing its position on the “foundry side,” that means the manufacture-for-hire of chips designed by different corporations.

“Increasing domestic production of semiconductor chips is critical for our national and economic security,” stated U.S. Commerce Secretary Gina Raimondo in a statement Tuesday praising Samsung’s announcement.

CBS Information’ Khristopher Brooks contributed to this report.

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