U.S. provides $6.4 billion in subsidies to Samsung to increase chip production in Texas By Reuters

Written by Leah Douglas and Alexandra Alper

(Reuters) – The Biden administration will award up to $6.4 billion in subsidies to South Korea’s Samsung (KS:) to expand chip production in Central Texas as part of a broader effort to boost U.S. chip manufacturing, the Commerce Department said on Monday. It was revealed.

Funding from the Chip and Science Act of 2022 will support two chip production facilities in Taylor, Texas, a research center and a packaging facility, the agency said, as previously reported by Reuters.

Commerce Secretary Gina Raimondo said this would allow Samsung to expand its semiconductor facility in Austin, Texas, while increasing chip production for the aerospace, defense and automotive industries and strengthening national security, administration officials told reporters.

“(These investments) will allow the United States to once again lead the world not only in semiconductor design, where we currently lead, but also in manufacturing, advanced packaging, and research and development,” Raimondo said.

The announcement, which makes Samsung the third-largest Chip Act award winner, is the latest move by the Biden administration to build a chip manufacturing industry in the United States, as first reported by Reuters.

The goal is to reduce dependence on China and Taiwan, as the U.S. share of global semiconductor manufacturing capacity has fallen from 37% in 1990 to 12% in 2020, according to the Semiconductor Industry Association (SIA).

Lawmakers have warned that America’s reliance on chips made in Taiwan by TSMC, the world’s leading chipmaker, is risky because China claims Taiwan as its own territory and reserves the right to use force to retake it.

“By investing in advanced semiconductor manufacturing, we help secure vulnerable supply chains, strengthen our national security and global competitiveness, and create new jobs for Texans,” said Texas Republican Senator John Cornyn, who co-sponsored the bill. “We are giving it,” he said.

Samsung Electronics is expected to invest about $45 billion in building and expanding its Texas plant by the end of 2010, a senior administration official said.

“We applaud Samsung for its bold investment in U.S. manufacturing and salute the U.S. Department of Commerce for making significant progress implementing the CHIPS Act’s manufacturing incentives and R&D programs,” SIA said in a statement.

Intel (NASDAQ:) secured $8.5 billion in subsidies last month, while Taiwan’s TSMC secured $6.6 billion in April to expand its U.S. production facilities.