Could Samsung be key to a unifying start to Biden’s presidency?
Samsung’s aggressive pursuit of the next coveted die shrink in the semiconductor segment is likely to result in another large-scale expansion in the United States. Meaning it’s just a matter of time when the tech giant will be in a position to offer direct support to the new administration. And a White House with a veteran statesman like Joe Biden at the helm is one that’s likely to wholeheartedly welcome any help it can get from its long-time ally of South Korea’s largest company.
After all, veteran statesman Joe Biden has been pretty open about his desire to start the presidency in as unifying and amicable fashion possible since the primaries. The same sentiment was also at the center of the 46th’s Wednesday inaugural address, and there are plenty of reasons why Samsung could be the key to that daunting political undertaking. At least ten billion of them, to be exact.
If you have slept through this morning’s sounds of breaking news and giggling pundits, the short version of the story is that Samsung appears to be on the verge of constructing another futuristic chipmaking plant in the U.S. – one valued at $10 billion, at that.
Why would Samsung want to help Biden, and vice versa?
The company supposedly laid down the preliminary plans for the construction, which is expected to start later this year in Austin, Texas. Most other details are hazy, but the timing of this rumor’s appearance is pretty telling on its own. And what it tells us is that Samsung is eager to finalize the proceedings as swiftly as possible.
The urgency is understandable: TSMC is still ahead of Samsung in the 3nm race and Intel keeps schooling it in sales. The latter is happening even as Santa Clara is simultaneously downsizing its manufacturing so rapidly that it might have to outsource a portion of its 2021 orders to its Seoul-based rival. So, if Samsung is to even approach delivering on its recent vow to launch a 3nm process node ready for mass-production in 2022, it’s running out of time to secure the infrastructure required to push it over the finish line.
And as things usually go with such humongous construction projects ($10 billion roughly equates to two months of Texas’s budget), Samsung is bound to seek some goodwill in the form of high-level tax breaks, deregulation, or other forms of regulatory concessions before it greenlights the single biggest overseas buildout in its 82-year history. Especially given Biden’s reputation as a consistent mediator in such scenarios.
At the same time, the 46th chief of state might not have many openings for bipartisan wins in the coming months. Securing a $10 billion injection right into the heart of the largest red state might just do the trick, however. That would be the same locale where Samsung already opened a fabless silicon shop and R&D center back in 2007. At the time, the facility was the largest wafer factory on the planet. Its very first mass-produced solutions were intended for 300mm NAND flash memory wafers. About 13 years’ worth of Moore’s law still holding up later, the industry is now perfecting 5nm tech, with the next goal being a 3nm die shrink.
How Samsung’s 2021 investment compares to its 2007 Texan debut
The cost of doing business is way higher, however. Samsung’s Texan venture initially set it back around $3.5 billion. That amounts to nearly $4.4 billion in 2021 dollars, adjusted for inflation. And yet the new facility that seems to be on the way is near-guaranteed to dwarf Samsung’s previous investments in the region by several orders of magnitude, as per today’s report.
Regardless of whether Samsung expands its Austin footprint in the near future, the rumors of its alleged plans to do so have emerged a month after its number one rival, TSMC, officially announced plans to construct a similarly cutting-edge facility in Arizona, valued at around $12 billion.
Samsung recently outlined its near-term plans to catch up with TSMC and become the largest chipmaker in the world. Its comeback is meant to begin no later than 2022, as Samsung claims it will already start offering 3nm process node by then.
Given how Samsung’s been telegraphing its growing ambitions in Texas for a while now, the stage is pretty much set for some official talks to happen in the near future. With that said, it remains to be seen whether Samsung manages to navigate its way to a spot in the administration’s first 100-day agenda. To that end, we might see the company become even more involved with COVID-19 relief efforts across the U.S. Not least because Samsung’s many divisions already found so many ways to make a difference in every part of the world.
In any case, the start of the Biden presidency probably won’t put Samsung in any more publicly awkward situations, but that isn’t to say the company won’t try to distance itself from low-level populism, should it suspect any. Doing so would be in line with its long-time policies on dealing with foreign legislators; the principles don’t discourage cooperation, by any means, but definitely emphasize keeping government officials at an arm’s length. After all, Samsung’s failure to do so domestically has been an expensive lesson that continues to this date.Join the Discussion