Samsung enters high-stakes chip race with TSMC, Intel on back of US subsidy
Samsung Electronics has entered into a full-fledged competition with its foundry business rivals, TSMC and Intel, in the rapidly-growing AI chip market, by receiving $6.4 billion in subsidies from the U.S. government, according to the company and industry experts, Tuesday.
The anticipation heightened following an announcement from the U.S. Department of Commerce on Monday confirming a contract with Samsung to provide up to $6.4 billion in subsidies for facility investments under the CHIPS and Science Act. This development underscores Samsung’s commitment to expanding its presence in the AI chip market and positions it as a formidable contender against rivals TSMC and Intel.
The massive subsidy is the third-largest grant support offered by Washington, trailing behind the $8.5 billion allocated to Intel and the $6.6 billion provided to Taiwan’s TSMC.
In response, Samsung unveiled plans to construct an additional semiconductor factory adjacent to a foundry plant in Taylor, Texas, which has been under construction since 2022. This expansion will also include the establishment of packaging and R&D facilities. The investment amount is set to surge from $17 billion to $45 billion by 2030.
The subsidy and the expanded facilities in the U.S. are anticipated to bolster Samsung’s ability to strengthen local production for major clients in the region, particularly in the face of fierce competition in the chip market.
Kyung Kye-hyun, semiconductor CEO of Samsung, emphasized that the company’s U.S. facilities will foster closer connections with customers and partners in the region. He added that these expanded operations will play a vital role in stabilizing the chip supply chain for the U.S.
“We’re not simply expanding production facilities. We’re actively fortifying the local semiconductor ecosystem and positioning the U.S. as a premier destination for global semiconductor manufacturing,” Kyung said during an event held at Taylor on Monday announcing Samsung’s chip investments.
“To meet the expected surge in demand from U.S. customers, particularly for future products like AI chips, our fabs will be outfitted with cutting-edge process technologies and help bring security to the U.S. semiconductor supply chain.”
Experts said Samsung’s increased investments in semiconductor infrastructure in the U.S. will bolster its standing in the industry as the company strives to fortify its foundry business and broaden the availability of AI memory chips.
“The main purpose of Samsung’s increased investments in the U.S. is to strengthen the foundry business at a time when TSMC is leading the business and Intel is catching up,” Lee Jong-hwan, a professor at the department of system semiconductor engineering at Sangmyung University, said.
“There are many fabless companies in the U.S., and due to their connectivity, the U.S. government provides many subsidy benefits, so Samsung is also making additional investments to strengthen its competitiveness in the foundry market.”
The professor added that Samsung is poised to gain significant momentum in expanding its AI memory chip business, particularly in the realm of high-bandwidth memory (HBM) chips, which are experiencing growing demand for AI services.