Biden admin awards Samsung $6.4 billion to boost Texas chip output

The Biden administration has announced plans to award up to $6.4 billion in grants to Samsung, a South Korean electronics giant, to bolster its chip production in central Texas. The initiative is part of a broader effort aimed at enhancing US chipmaking capabilities, the Department of Commerce revealed on Monday.

According to the agency, the funding, allocated under the 2022 Chips and Science Act, will support the establishment of two chip production facilities, a research centre, and a packaging facility in Taylor, Texas. Additionally, it will facilitate the expansion of Samsung's existing semiconductor facility in Austin, Texas. These initiatives are expected to increase chip output, particularly for industries such as aerospace, defence, and automotive, while also strengthening national security.

Commerce Department Secretary Gina Raimondo stressed that these investments are crucial for positioning the United States as a global leader not only in semiconductor design but also in manufacturing, advanced packaging, and research and development.

The announcement marks Samsung as the third-largest recipient of Chips Act awards. The Biden administration's move underlines its commitment to reducing reliance on foreign chip manufacturers, particularly in China and Taiwan. The US semiconductor industry's share of global manufacturing capacity has dwindled significantly over the years, prompting concerns about supply chain vulnerabilities.

Samsung is set to invest approximately $45 billion in expanding its Texas facilities by the end of the decade, as stated by senior administration officials. This substantial investment reflects Samsung's commitment to strengthening its presence in US-based manufacturing.

Industry stakeholders, including the Semiconductor Industry Association (SIA), have praised Samsung's bold investment in American manufacturing. SIA highlighted the significance of the Commerce Department's efforts in implementing the CHIPS Act's manufacturing incentives and research and development programs.

This announcement comes on the heels of similar grants awarded to Intel and Taiwan Semiconductor Manufacturing Company (TSMC) last month, further underscoring the Biden administration's commitment to revitalizing the domestic semiconductor industry.

(With Reuters inputs)