US Government to grant $6 billion chip subsidy to Samsung for Texas expansion

Biden’s chip subsidies: The Biden administration plans to allocate over $6 billion to Samsung Electronics Co., Ltd., a South Korean tech giant, to expand its chip output in Taylor, Texas, according to sources familiar with the matter.

The subsidy, to be revealed by Commerce Department Secretary Gina Raimondo, is earmarked for the construction of four facilities in Taylor. These facilities include a $17 billion chipmaking plant, a separate factory, an advanced packaging facility, and a research and development centre. Additionally, there will be an investment in another undisclosed location. As part of this deal, Samsung is expected to more than double its investment in the US, totalling over $44 billion.

Both the Commerce Department and Samsung declined to comment on the matter, and requests for comment from Texas Governor Greg Abbott's office went unanswered.

Sources familiar with the plan note that this subsidy would rank as the third-largest of its kind, trailing closely behind Taiwan's TSMC, which recently received $6.6 billion to expand its operations and increase investment in the US.

The announcement comes amidst a concerted effort by the US government to boost domestic chip production, aiming to attract investment away from China and other regions. The Chips and Science Act, approved by Congress in 2022, allocated substantial funding towards this goal, with $52.7 billion dedicated to research and manufacturing subsidies, along with $75 billion in government loan authority. However, Samsung reportedly intends to forgo taking any loans.

The objective of the CHIPS Act is to lessen dependence on China and Taiwan, given that the US's share of global semiconductor manufacturing capacity has declined significantly over the years. President Joe Biden will not be in attendance at the event, according to sources, as he focuses on his re-election campaign. Governor Greg Abbott of Texas, a Republican, has been invited to attend.

While other semiconductor giants like TSMC and Intel are expanding their production in Arizona, Samsung's decision to expand in Texas, a reliably Republican state, may have different political implications.

(With Reuters inputs)