Samsung Boosts U.S. Presence with $45bn Investment, Receives $6.4bn Government Grant

In a significant move for U.S. technology, the Commerce Department has confirmed Samsung Electronics will receive a $6.4 billion grant to support the development of advanced semiconductor facilities in Texas, escalating its total U.S. investment to $45 billion.

Samsung Set to Receive Largest Proportional US Grant for New Chip Factories in Texas, Bolstering Advanced Manufacturing

While this is less in absolute amounts than the awards awarded to Intel and TSMC under the CHIPS and Science Act of 2022, it is the largest of the three in terms of the company's expected investment.

Commerce Secretary Gina Raimondo said on April 14 that the award would help Samsung establish two chip factories to mass-produce 2-nanometer chips, an advanced packaging facility, and a research and development center in Taylor, Texas. Samsung will also expand an existing factory in Austin, Texas, to create power-efficient chips used in aerospace, defense, and automotive applications.

According to Nikkei Asia, Samsung's total investment in the United States will more than quadruple to approximately $45 billion, up from $17 billion previously, according to a senior US official. The first fab will begin production in 2026, followed by the second in 2027, the same year the R&D facility is planned to open, according to the official. The official also stated that two dozen suppliers have indicated they will relocate to the United States to participate in the new Samsung cluster.

"To put in perspective how massive these facilities are, just the first leading-edge fab is the size of 11 football fields. And Samsung is building two of them," Raimondo told reporters.

The grant, which follows the $8.5 billion awarded to Intel and the $6.6 billion to Taiwan Semiconductor Manufacturing Co., is part of attempts to establish the United States as a main base for leading chip manufacturing. Among the top three chipmakers, Samsung is expected to receive the most support proportional to the amount of investment it has pledged; in this case, the subsidies are equivalent to approximately 14% of its planned investment.

Unlike TSMC and Intel, the government made no announcements regarding loans to Samsung as part of its support. The South Korean corporation has large cash reserves. As of December 31, its cash and cashable assets totaled 69.1 trillion won ($49.9 billion).

Samsung Strengthens Position in Global Chip Race, Targets Advanced AI Capabilities and Expanded US Manufacturing

Only Samsung, TSMC, and Intel remain in the global competition to develop the most advanced chips. Each aims to create 2-nanometer semiconductors for core processors found in computers and servers and to enable generative AI computation.

Samsung is the No. 2 participant in the global foundry sector, which manufactures semiconductors for external clients, with a 14% market share. According to Counterpoint data for the fourth quarter of 2023, TSMC is the market leader, with a 61% share. Intel, which formerly produced chips only for internal use, is now attempting to enter the foundry industry to get more chip developers to use its facilities.

Samsung has an edge in that it is the world's leading chipmaker of DRAM and NAND flash memory, which are important components for storage and computation in many electronic devices, particularly the ever-more powerful CPUs required for generative AI.

The Samsung grant announcement "is the third and final leg of President [Joe] Biden's plans to bring the manufacturing of leading edge semiconductors back to the United States after decades of concentration in Asia," Biden's national economic adviser, Lael Brainard, told reporters.

Samsung has agreed to manufacture chips directly for the United States. Brainard stated that the Department of Defense will bolster national security.

The United States government has also announced grants for older-generation chips through the CHIPS Act, including $1.5 billion for GlobalFoundries, $162 million for Microchip Technology, and $35 million for BAE Systems Electronic Systems.

According to Brainard, global semiconductor businesses have committed more than $240 billion to reinvigorate semiconductor production in the United States.

Samsung Innovates with Unique 3D and 2.5D Chip Packaging at New U.S. Facility, Aiming to Revitalize Memory Chip Sector

According to a senior official who briefed reporters, the innovative packaging plant will include characteristics unique to Samsung. On top of 3D stacking, a process for generating high-bandwidth memory chips, Samsung will launch 2.5D integration, which combines logic and memory chips into a single package.

"Samsung is a distinctive player in the industry. It's the only player in the industry that does both advanced memory and advanced logic," the official said. The company is "uniquely positioned to pull those things together into this packaging facility," he said.

The statement comes as Samsung is recovering from a prolonged slump caused by a decline in the memory chip business. The business announced earlier this month that its operational profit increased more than tenfold to 6.6 trillion won ($4.9 billion) in the first quarter compared to last year, raising hopes that its semiconductor unit would generate a profit for the first time in more than a year.

According to analysts, Samsung's large-scale investment emphasizes the US market.

"The U.S. wants to produce semiconductors on its home soil, and most advanced semiconductor companies are based in the country. Samsung cannot go alone without meeting their standards," said Lee Seung-woo, head of research at Eugene Investment & Securities in Seoul. "Samsung recently suspended construction of its chip fab in Pyeongtaek. It shows that the company is prioritizing the U.S. rather than domestic [market]."

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