Samsung to get $6-7 billion in chip subsidy next week for Texas expansion, sources say

By Thomson Reuters Apr 8, 2024 | 12:43 PM

By Alexandra Alper

WASHINGTON (Reuters) – The Biden administration plans to announce it is awarding between $6 billion and $7 billion to South Korea’s Samsung next week to expand its chip output in Taylor, Texas, as it seeks to ramp up chipmaking in the U.S., two people familiar with the matter said.

The subsidy, which will be unveiled by Commerce Department Secretary Gina Raimondo, will go towards construction of four facilities in Taylor, including one $17 billion chipmaking plant that Samsung announced in 2021, another factory, an advanced packaging facility and a research and development center, one of the sources said.

It will also include an investment in another undisclosed location, the source said, adding that Samsung will more than double its U.S. investment to over $44 billion as part of the deal.

The Commerce Department declined to comment. Samsung and Texas Governor Greg Abbott’s office did not immediately respond to requests for comment.

One of the sources said it would be the third largest of the program, just behind Taiwan’s TSMC , which was awarded $6.6 billion on Monday and agreed to expand its investment by $25 billion to $65 billion and to add a third Arizona factory by 2030.

The announcement caps off a string of major Chips and Science grants in quick succession as the U.S. seeks to expand domestic chip production and lure away capital that might have been used to build plants in China and the region.

Congress in 2022 approved the Chips and Science Act to boost domestic semiconductor output with $52.7 billion in research and manufacturing subsidies. Lawmakers also approved $75 billion in government loan authority, but one of the sources said Samsung plans to take no loans.

The CHIPS Act’s goal is to reduce reliance on China and Taiwan, as the share of global semiconductor manufacturing capacity in the U.S. has fallen from 37% in 1990 to 12% in 2020, according to the Semiconductor Industry Association.

U.S. President Joe Biden will not attend the event, the two people said. He faces a tough fight to win a second term in November against former President and Republican rival Donald Trump. Greg Abbott, the Republican governor of Texas was invited to attend, one of the people said.

While both TSMC and Intel, which was awarded $8.5 billion to expand its U.S. chip output last month, will expand production in the key Swing state of Arizona, Samsung’ expansion in reliably Republican Texas is seen as less likely to help Biden at the polls.

(Reporting by Alexandra Alper; additional reporting by David Shepardson; Editing by Marguerita Choy)