The South Korean conglomerate Samsung is currently in discussions to establish a microchip factory in Austin, Texas. The $10 billion investment is aiming to start construction later this year, with the installation of any major equipment beginning in 2022.
Officially launching operations as early as 2023, in a bid to win more American clients and beat Taiwan Semiconductor Manufacturing Co. (TSMC) as the world’s biggest contract chipmaker.
The Taiwanese semiconductor company which is Samsung’s main rival in the chip sector is already planning to build a new plant in Phoenix, Arizona.
“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, the senior vice president of 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.”
But although city officials have begun to analyze Samsung’s request to turn a 440.000 sq. meter plot for industrial development, Samsung is also hoping that its initiative will receive government support.
As a result, the smartphone company has hired lobbyists to advocate for the project and hopefully secure large tax incentives which will make up for cheaper costs in other countries as well as those offered by foreign governments.
“In order to become the world leader, Samsung needs to attract orders from Apple, Intel and others” who currently work with TSMC, said Lee Seung-woo, chief analyst at Eugene Investment & Securities, a financial service provider specialized in the securities market.
In April 2019, Samsung announced its plans to invest a total of 133 trillion won (about $116 billion) by 2030 in order to update its infrastructure and earn more market revenue.
The strategy seems to be focused on growing 2 important business segments: system LSI (non-memory chips, like application processors) and foundry (contract chip manufacturing).
In the long run, Samsung’s plans to expand the production capacity in the United States could make it more appealing to some of its partners, such as Nvidia, a tech giant that produces gaming market GPUs as well as SoCs, and Qualcomm, a multinational corporation that creates semiconductors.
Samsung’s proposed plant in Texas would employ as many as 1.900 people and could end up costing as much as $17 billion.