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Samsung said to spend $10 billion on a massive chipmaking plant in Texas

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Last updated: January 22nd, 2021 at 10:46 UTC+02:00

Samsung is a leading semiconductor manufacturer largely because of its dominance in the memory chip market. The company has been investing heavily in its foundry operations for advanced logic chips as it wants to compete more effectively with TSMC. For Samsung, there’s significant growth potential in utilizing its chipmaking expertise to produce logic chips like processors for clients that don’t have their own foundry.

TSMC is the market leader currently and Samsung is reaching into its deep pockets to put on a fight. According to reports, Samsung is considering a massive $10 billion investment in a new chipmaking plant that would be located in Texas.

Samsung has a $116 billion plan to defeat TSMC

Bloomberg reports that Samsung wants to build its most advanced logic chipmaking plant in the United States. It’s willing to spend more than $10 billion on this project. Samsung hopes that this investment will help it win more clients in the US and thus take the fight to TSMC.

Samsung is in discussions to build this new factory in Austin, Texas. It will be able to produce chips on the highly advanced 3nm process there. The plan right now is to start construction work this year with major equipment being installed in 2022 before operations begin in 2023. This will be the first chipmaking plant in the United States to use extreme ultraviolet lithography, a highly advanced technology that Samsung utilizes to manufacture next-gen chips.

The time might be just right for Samsung to consider an investment at this scale in the country. The US government wants to bring back advanced manufacturing jobs that have largely shifted to Asia over the past couple of decades.

The world’s biggest tech companies like Microsoft, Google and Amazon are increasingly designing their own chipsets for datacenters. Since they don’t have their own foundry, they need to work with a partner like TSMC or Samsung. A manufacturing base in the US would put Samsung in a better position to try and win orders from these titans of the industry.

Samsung isn’t the only company that has had this idea. TSMC is also building its own $12 billion chipmaking plant in Arizona. It’s expected to come online by 2024. Samsung currently has a facility in Austin but it’s only capable of running older processes. It needs a new facility for the EUV lines. Samsung only has two EUV plants currently. One is located at its main chip facility in Hwaseong while another is being built in Pyeongtaek, South Korea.

The new plant will be located right next to the Austin fab. Samsung’s US division already purchased land next to the fab in October last year. Samsung has also requested the Austin City Council to permit rezoning that land for industrial development.

With a new administration taking over the government, Samsung is also looking to negotiate potential incentives with the Biden White House. It has hired people in Washington D.C. to lobby for the deal in order to obtain any potential tax benefits and subsidies. The report does mention that Samsung wants to go ahead with the deal even if it doesn’t get any major incentives from the government.

Samsung has made no secret of the fact that it’s dead serious about becoming the largest player in the industry. That would mean dethroning TSMC which isn’t going to be easy. Samsung’s vice chairman and de-facto heir Lee Jae-yong has already said that the company will invest $116 billion over the next ten years to revamp its foundry and chip design business. With its deep pockets, that’s really not going to be an issue for Samsung.

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