Samsung Considering 3 U.S. Fab Locations

Article By : Alan Patterson

Arizona, New York and Texas are in the running, with U.S. tax breaks likely the deciding factor.

Samsung said it is negotiating with three U.S. states to build a $17 billion chip facility that could start production as early as the end of 2024. If the world’s second-largest chipmaker fails to win sufficient subsidies in the U.S., the company said it would instead construct the new fab in South Korea, where Samsung is headquartered.

The company is evaluating sites in Texas, where it operates two chip facilities, including an EUV fab in Austin, along with New York and Arizona. If built, the new fab that would make advanced logic chips for Samsung’s new foundry business, the company said in a filing with the Texas comptroller’s office.

The investment plan is critical to the U.S. goal of reviving domestic semiconductor production. The U.S. currently accounts for about 12 percent of global production in an industry dominated by companies in South Korea and Taiwan. Taiwan Semiconductor Manufacturing Co. (TSMC), Samsung’s top competitor, makes semiconductors used in everything from satellites to set-top boxes.

Samsung and TSMC are key players along with Intel Corp. in helping the U.S. rebuild its semiconductor manufacturing base. TSMC is constructing a $12 billion fab in Phoenix on the expectation of incentives from Washington and the Arizona state government.

Samsung said a final decision on building a U.S. fab hinges on the extent of tax breaks.

“Due to the higher tax cost of operating in Texas, the appraised value limitation is a determining factor,” Samsung said in the filing. “Without the appraised value limitation award, the company would likely locate the project in Arizona, New York or [South] Korea.”

The Samsung fab sweepstakes comes amid bipartisan support in Washington to re-shore U.S chip manufacturing. The Senate has approved a $52 billion package to boost new investments in domestic chip production. The provision requires approval by the House, which has offered its own package of technology investments that place greater emphasis on chip R&D.

Austin, where Samsung operates two fabs, is under consideration, along with two locations near Phoenix, Goodyear and Queen Creek, and a site in Genesee County, N.Y.

Widespread power failures across Texas last February halted manufacturing operations at Samsung, NXP and Infineon fabs.. The chipmakers lost hundreds of millions of dollars in Austin after the shutdown, which contributed to a global shortage of semiconductors. The power grid failure could impact chipmakers’ interest in expanding operations in Austin, analysts told EE Times last winter.

Samsung said it is evaluating the four potential sites based on access to talent, the existing semiconductor manufacturing ecosystem, speed to market and the strength of public-private partnerships. The project is expected to create at least 1,800 high-paying jobs, according to Samsung’s filing.

The global semiconductor shortage has increased awareness of the importance of chips for economic growth. In particular, automakers were forced to idle production lines in response to IC supply chain disruptions. Those disruptions and the accompanying loss of employment and economic growth have prompted more nations to evaluate plans to build domestic chip facilities.

In July, for example, TSMC said it was considering building a fab in Japan, which once dominated memory chip manufacturing. Japan is among the western nations seeking to secure its electronics supply chain.

This article was originally published on EE Times.

Alan Patterson has worked as an electronics journalist in Asia for most of his career. In addition to EE Times, he has been a reporter and an editor for Bloomberg News and Dow Jones Newswires. He has lived for more than 30 years in Hong Kong and Taipei and has covered tech companies in the greater China region during that time.

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