US to provide $6.4B direct funding to Samsung for chip production in Texas

ISTANBUL

The US will provide up to $6.4 billion direct funding to South Korean tech major Samsung for chip manufacturing in the state of Texas, according to a statement on Monday.

The Commerce Department said it has signed a non-binding preliminary memorandum of terms with Samsung under the CHIPS and Science Act in order to strengthen the resilience of the US' semiconductor supply chain, advance its leadership in technology, and fuel the nation's global competitiveness.

Samsung is expected to invest more than $40 billion in the Texas region in the coming years, while the proposed investment would support the creation of over 20,000 jobs.

The proposed investment includes production of leading-edge chips in the US, two new logic fabs, a research and development fab, an advanced packaging facility, and an expansion to Samsung facility in the city of Austin.

"These facilities will support the production of some of the most powerful chips in the world, which are essential to advanced technologies like artificial intelligence and will bolster U.S. national security," President Joe Biden said in a statement released by the White House.

The US aims to manufacture approximately 20% of the world's leading-edge logic chips by 2030, according to the Commerce Department.

"The chips that Samsung will be making in Texas are important components to our most advanced technologies, from artificial intelligence to high-performance computing and 5G communications," Commerce Secretary Gina Raimondo said in a separate statement.

The recent agreement is the third grant the US has made in the past four weeks after Biden unveiled last week it will provide up to $6.6 billion direct funding for Taiwan Semiconductor Manufacturing Company (TSMC) under the CHIPS and Science Act. The funding will support TSMC's investment of more than $65 billion in three leading-edge fabs in Phoenix, Arizona to manufacture the world’s most advanced semiconductors.

Biden announced in March his administration will provide $8.5 billion funding for Intel through the CHIPS and Science Act for the American chipmaker to fund its facilities in the states of Ohio, Arizona, New Mexico and Oregon.

The CHIPS and Science Act was signed into law by Biden in August 2022. It sets aside $52.7 billion to increase production of US-made semiconductors, address supply chain vulnerabilities by producing more goods in the US, and bolster domestic scientific research.