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Wednesday, December 8, 2021

Samsung chooses Texas as site of new $17bn chip plant


Samsung has chosen a site close to the city of Taylor in Texas for its new $17bn (£12.7bn) computer chip plant, amid a global shortage of semiconductors.

It is the South Korean electronics giant’s biggest-ever US investment.

Construction on the plant, which is expected to begin early next year, is expected to create 2,000 jobs in the technology industry.

Samsung, like several of its competitors, is racing to expand chip production in the United States in order to address supply chain issues.

“With increased manufacturing capacity, we will be able to better serve our customers’ needs while also contributing to the stability of the global semiconductor supply chain,” said Kinam Kim, CEO of Samsung electronics device solutions.

The plant is scheduled to open in the second half of 2024.

It comes as US Vice President Joe Biden has been pressuring chipmakers to increase production in the US.

White House officials said the new facility would help “protect our supply chains, revitalise our manufacturing base and create good jobs”.

“Increasing domestic semiconductor chip production is critical for our national and economic security,” said US Commerce Secretary Gina Raimondo separately.

Greg Abbott, the Republican governor of Texas, tweeted, “Welcome to Texas, Samsung!” as he posted photos of an event to announce the plan.

Separately, the governor’s office announced that the company would receive a $27 million grant for job creation in the state.

The new facility’s chips will be used in a variety of technologies, including mobile, 5G, high-performance computing, and artificial intelligence.

Samsung is one of the world’s largest chipmakers, employing over 20,000 people in the United States.

The latest announcement brings the company’s total investment in the world’s largest economy to $47 billion.

Global chip shortage

The global chip shortage has been causing major disruptions for manufacturers, from carmakers that have had to suspend production to Apple warning that iPhone shipments would be delayed.

Taiwanese chipmaker TSMC announced a $100bn investment in Arizona earlier this year, while US contract semiconductor manufacturer GlobalFoundries announced that it will increase its investment in upstate New York.

The chip industry has been particularly hard hit by global supply chain issues.

Other environmental issues have also put a strain on production. Because chip manufacturing requires a lot of water, a drought in Taiwan [a global leader in chip manufacturing] hasn’t helped matters.

Neither did a power outage in Texas last winter, which temporarily halted production. Texas is the epicentre of the United States’ chip industry.

This will be good news for Joe Biden, who is trying to increase chip production in the United States through generous subsidies.

The only issue is that this is not a quick fix. It takes a long time to build chipmaking facilities. This project won’t break ground until next year, and it won’t start producing chips until at least 2024.

Right now, the world is in desperate need of computer chips. Demand far outnumbers supply, and there is no simple short-term solution.

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