The semiconductor industry in Texas is set to benefit further from the federal CHIPS and Science Act with Samsung in line to receive up to $6.4 billion in direct grant funding for its chip facilities in the central part of the state.
The funding would complement the more than $40 billion in private investment Samsung plans for its semiconductor operations in Central Texas including a research and development plant in Taylor and the expansion of the company’s fabrication facility in Austin, the White House said Monday.
Samsung will receive the grant as part of a non-binding preliminary memorandum of terms it signed with the U.S. Department of Commerce, according to the Biden administration. It said the federal funding and Samsung’s private investment would ultimately support the creation of more than 20,000 jobs in Central Texas and the surrounding region.
The Commerce Department’s announcement follows news that the Arizona subsidiary of Taiwanese chipmaker TSMC would receive up to $6.6 billion in federal funding to help pay for the company’s third plant in the Phoenix area.
The burgeoning semiconductor sector in Austin is one of the reasons the Texas Capital ranked as the nation’s top secondary market for industrial inventory growth, according to a recent report.
That report from Transwestern Real Estate identified the Texas capital as one of 12 “geographically diverse secondary markets” with 10% or more industrial inventory growth since the start of the pandemic. The population shift from major coastal cities such as Los Angeles, New York and San Francisco to Sun Belt locations including Austin helped it rank so highly.
Austin has led the way among secondary markets in industrial sector growth since 2020, according to Transwestern, ranking ahead of Phoenix, Indianapolis, Las Vegas and Salt Lake City.
Samsung’s Regional Plans
The $6.4 billion grant was offered to South Korea-based Samsung as part of the CHIPS and Science Act that President Biden signed into law in 2022. The act broadly aimed to revitalize the U.S. semiconductor production industry.
More than 80% of semiconductor manufacturing takes place in Asia, according to a Deloitte report on the semiconductor industry that was published this year. Samsung's investments in Central Texas, however, could help the United States eventually account for the manufacturing of about 20% of the world’s semiconductor chips by 2030, according to a White House statement.
Samsung would use the Commerce Department grant to create about 4,500 manufacturing jobs and 17,000 construction jobs within the next five years. Samsung already has committed nearly $20 billion to build a semiconductor factory in the Austin suburb of Taylor, and that doesn’t include the company’s suppliers and vendors who have or plan to have a physical presence near the South Korean corporation’s Central Texas facilities.
The federal funding would also support academic programs at local trade schools and universities.
The Commerce Department said Samsung would specifically use some of the grant funds to expand its footprint in Austin, where the South Korean semiconductor company has had a presence since the 1990s.
“This proposed investment would expand the existing facilities to support the production of leading fully depleted silicon-on-insulator (FD-SOI) process technologies for critical U.S. industries, including aerospace, defense, and automotive. This proposed investment also includes commitments to collaborate with the U.S. Department of Defense,” according to a Commerce Department statement.
The Commerce Department’s grant funding would also help Samsung pay for its semiconductor manufacturing plant in Taylor. The Taylor plant would specialize in research and development, advanced packaging and the production of semiconductors that would be used in the automotive, communications and defense industries, as well as for artificial intelligence and high-performance computing.
“We’re not just expanding production facilities; we’re strengthening the local semiconductor ecosystem and positioning the U.S. as a global semiconductor manufacturing destination,” Kye Hyun Kyung, president and CEO of Samsung Electronics' device solutions division, said in a statement. “To meet the expected surge in demand from U.S. customers, for future products like AI chips, our fabs will be equipped for cutting-edge process technologies and help advance the security of the U.S. semiconductor supply chain.”
Samsung, according to the Commerce Department, also plans to claim a U.S. Department of the Treasury’s Investment Tax Credit to help cover up to 25% of the company’s capital expenditures for its new projects in Austin and Taylor.