Samsung announces a new semiconductor facility in Texas

Samsung pronounces a brand new semiconductor facility in Texas

South Korean electronics large Samsung mentioned it plans to construct a $17 billion semiconductor manufacturing facility outdoors of Austin, Texas, amid a world scarcity of chips utilized in automobiles, telephones, tablets, online game consoles and different digital units.

“That is the biggest overseas direct funding within the state of Texas, ever,” Governor Greg Abbott mentioned in asserting the venture Tuesday.

Samsung mentioned it would begin constructing the plant subsequent 12 months and hopes to start operations within the second half of 2024. The corporate selected the positioning based mostly on authorities incentives and the “readiness and stability” of native infrastructure, Samsung Vice Chairman Kinam Kim mentioned throughout a press convention with Abbott.

The brand new facility will enhance manufacturing of high-tech chips used for 5G cellular communications, superior computing and synthetic intelligence, Samsung mentioned.

The coronavirus pandemic is the primary issue behind the worldwide chip scarcity, in line with the Semiconductor Business Affiliation, a commerce group. A surge in coronavirus instances within the Asian nations that produce most chips, mixed with a collection of disasters together with a manufacturing facility hearth and a deep freeze in Texas, has led chipmakers to provide lower than they’d usually. Additionally final 12 months, demand for electronics soared when many individuals began working from house and the nation’s restricted provide of chips went to these units, the commerce group has mentioned.

It is an ideal storm that is left automakers, which additionally rely closely on semiconductors, scrambling for chips. That is driving up the price of new automobiles, with new-car costs hitting a file $43,355 in September, in line with Kelley Blue E book, which is 10% larger than one 12 months in the past.

Other than Samsung, many chipmakers are spreading out their manufacturing operations in response to the chip shortages. Taiwan Semiconductor mentioned in April that it plans to construct a $12 billion manufacturing manufacturing facility in Arizona. Intel broke floor on two new chip factories in Arizona in September.

Final week, Ford Motor mentioned it is partnering with GlobalFoundries to provide extra chips for its automobiles. The chips from GlobalFoundries will probably be initially utilized in Ford’s hands-free driver help and automobile battery administration techniques, the businesses mentioned.

A number of chipmakers have signaled an curiosity in increasing their American operations if the U.S. authorities is ready to make it simpler to construct chip crops. Micron Know-how, for instance, mentioned it would make investments $150 billion globally over the following decade in growing its line of reminiscence chips, with a possible U.S. manufacturing growth if tax credit may also help make up for the upper prices of American manufacturing. 

“It is smart for the provision chain to be a bit extra diversified geographically,” Angelo Zino, an analyst at CFRA, advised the Related Press. “You are clearly seeing some new foundry capability plans being introduced within the U.S. in addition to Europe.”

Samsung is the dominant participant available in the market for the reminiscence chips which can be key to smartphones and different gadgetry, however Zino mentioned the corporate can also be increasing its function on the “foundry facet,” which means the manufacture-for-hire of chips designed by different companies.

“Growing home manufacturing of semiconductor chips is important for our nationwide and financial safety,” mentioned U.S. Commerce Secretary Gina Raimondo in a assertion Tuesday praising Samsung’s announcement.

CBS Information’ Khristopher Brooks contributed to this report.

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