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Samsung Electronics Co. is gearing up to steal China’s thunder in the semiconductor industry as it’s set to invest a whopping $44 billion in chipmaking in the US.
Part of this comes from a $6.4 billion grant in federal funds to revitalize the semiconductor industry in America, which is part of the Biden–Harris administration’s Chips and Science Act of 2022.
The Act has stimulated approximately $280 billion in private semiconductor investments to counter the industry’s growth in China.
Samsung’s $44 billion chipmaking project is likely to be announced in Taylor, Texas, in the presence of Commerce Secretary Gina Raimondo this week.
What is the CHIPS and Science Act?
The CHIPS and Science Act was enacted to boost research, innovation, and manufacturing in America’s semiconductor industry.
Source: Department of Commerce
The CHIPS Act aims to spend an astounding $280 billion in the US over the next ten years. Most of this (around $200 billion) will go towards scientific and R&D commercialization of leading-edge technologies like quantum computing, nanotechnology and more.
The investments will catalyze the building of new high-tech hubs and enhance the science, technology, engineering, and math workforce.
A further $52.7 billion will be set aside for the semiconductor industry, plus $24 billion worth of tax credits for chip production.
The Motivation Behind Samsung’s $44 Billion Investment
Samsung seems to be putting a lot of effort into fortifying its position in the semiconductor industry where it’s already a big player. As a major chip manufacturer, Samsung’s competition with China is long-standing.
China’s Taiwan Semiconductor Manufacturing Company (TSMC) has a market share of 61.2% in the global semiconductor market, while Samsung has 11.3%.
We’re not just expanding production facilities; we’re strengthening the local semiconductor ecosystem and positioning the US as a global semiconductor manufacturing destination.Kye Hyun Kyung
In the era of AI and modern technology, semiconductors are the new oil. The shortage of AI chips means there’s huge potential for growth in the semiconductor industry.
For example, Nvidia’s sales more than doubled last year and its market cap increased by $1 trillion this year.
What’s also interesting is that Samsung’s investment decision came soon after South Korea announced that it would invest 9.4 trillion won ($6.4 billion) in AI by 2027 to boost its semiconductor industry.
Samsung’s expansion in Texas adds to Texas Instruments‘ significant investment in the state’s semiconductor industry. Due to a delay last year, it’s unclear when mass production will start at the Taylor site.
The announcement next week will trigger a period of due diligence during which the Department of Commerce and Samsung will finalize the agreement’s terms. The funds will then be paid out as the project meets major construction and production targets.
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