Samsung eyes $10 billion plant in Texas
Chipmaker is hoping to win more U.S. clients as it tries to catch the industry leader, TSMC
Samsung Electronics Co. is considering spending more than $10 billion building its most advanced logic chipmaking plant in the U.S., a major investment it hopes will win more American clients and help it catch up with industry leader Taiwan Semiconductor Manufacturing Co.
The world’s largest maker of memory chips and smartphones is in discussions to locate a facility in Austin capable of fabricating chips as advanced as 3 nanometers in the future, people familiar with the matter said.
Plans are preliminary and subject to change, but for now the aim is to kick off construction this year, install major equipment starting in 2022 and begin operations as early as 2023, they said.
While the investment amount could fluctuate, Samsung’s plans would mean upward of $10 billion to bankroll the project, one of the people said.
The envisioned plant would be Samsung’s first in the U.S. to use extreme ultraviolet lithography, the standard for next-generation silicon, the people said, asking not to be identified.
Asked about plans for a U.S. facility, Samsung said in an email that no decision has yet been made.
“If Samsung really wants to realize its goal to become the top chipmaker by 2030, it needs massive investment in the U.S. to catch up with TSMC,” said Greg Roh, senior vice president at HMC Securities. “TSMC is likely to keep making progress in process nodes to 3nm at its Arizona plant, and Samsung may do the same. One challenging task is to secure EUV equipment now, when Hynix and Micron are also seeking to purchase the machines.”
If Samsung goes ahead, it effectively would go head to head on U.S. soil with TSMC, which is on track to build its own $12 billion chip plant in Arizona by 2024.
Samsung is trying to catch
TSMC in the so-called foundry business of making chips for the world’s corporations — a particularly pivotal capability given a deepening shortage of semiconductors in recent weeks.
Under Samsung family scion Jay Lee, the company has said it wants to be the biggest player in the $400 billion chip industry.
It plans to invest $116 billion in its foundry and chip design businesses over the next decade, aiming to catch TSMC by offering chips made using 3-nanometer technology in 2022.
It already dominates the market for memory chips and is trying to increase its presence in the more profitable market for logic devices, such as the processors that run smartphones and computers.
It already counts Qualcomm Inc. and Nvidia Corp. as customers; those companies historically relied on TSMC exclusively. It has two EUV plants, one near its main chip site in Hwaseong, south of Seoul, South Korea, and another coming online nearby at Pyeongtaek.
To close a deal, Samsung may need time to negotiate potential incentives with the Biden administration.
The company has hired people in Washington to lobby on behalf of the deal and is ready to go ahead with the new administration
in place, the people said.
Tax benefits and subsidies will ease Samsung’s financial burden, but the company may go ahead even without major incentives, one of the people said.
Samsung has been looking into overseas chipmaking for years. Intensifying trade tensions between the U.S. and China and now COVID-19 are stoking uncertainty over the reliability and economics of the global supply chain.
Plants in the U.S. could help the Korean chipmaker strike better deals with key clients in the U.S., particularly in competition with TSMC.
Samsung’s U.S. branch purchased land in October next to its existing Austin plant, which is capable of running older processes. The Austin City Council held a meeting last month to discuss Samsung’s request to rezone that parcel of land for industrial development, meeting minutes show.
The company’s existing Texas facility is too small to meet increasing orders for outsourced chips coming from Qualcomm, Intel and Tesla, research by Citibank shows.
Intel in particular is likely to funnel more orders toward Samsung to offset any reliance on TSMC for its foundry needs, the brokerage said in a report.