Samsung to Receive $6.4 bn Subsidy for Chip Production in Texas

The United States will award up to $6.4 billion in grants to Samsung Electronics to expand its chip production in central Texas.
Galaxy S23 from SamsungSouth Korea-based Samsung is expected to invest roughly $45 billion in constructing and expanding its Texas facilities through the end of the decade, Reuters news report said.

The Commerce Department previously announced incentives for TSMC, Intel, GlobalFoundries, Microchip Technology, and BAE Systems.

The Department of Commerce said on Monday that the funding, from the 2022 Chips and Science Act, will enhance chip production for the aerospace, defense, and auto industries and bolster national security.

“The return of leading-edge chip manufacturing to America is a major new chapter in our semiconductor industry,” said White House National Economic Adviser Lael Brainard.

The U.S. investment in chip production is meant to reduce dependence on China and Taiwan.

“We applaud Samsung for investing boldly in U.S.-based manufacturing and salute the U.S. Commerce Department for making significant headway in implementing the CHIPS Act’s manufacturing incentives and R&D programs,” said the Semiconductor Industry Association (SIA).

The subsidy will support two chip production facilities, a research center and a packaging facility, said Commerce Secretary Gina Raimondo. It will also enable Samsung to expand its Austin, Texas, semiconductor facility.

Samsung earlier said its capital expenditures (Capex) in 2023 reached KRW 53.1 trillion, including KRW 48.4 trillion spent in the Device Solutions (DS) Division and KRW 2.4 trillion in Samsung Display Corporation (SDC). In the fourth quarter, Capex reached KRW 16.4 trillion, with KRW 14.9 trillion allocated to the DS Division and KRW 0.8 trillion to SDC.

“Investments will allow the U.S. to once again lead the world, not just in semiconductor design, which is where we do now lead, but also in manufacturing, advanced packaging, and research and development,” Gina Raimondo said.

Semiconductor Market in 2023

The size of the global semiconductor market dropped 8.2 percent to $526.8 billion in 2023 from $574.1 billion in 2022. Semiconductor market in Americas decreased 5.2 percent in 2023.

On a regional basis, Europe achieved annual growth in 2023, with sales there increasing 4.0 percent. Annual sales into all other regional markets dropped in 2023: Japan (–3.1 percent), the Americas (–5.2 percent), Asia-Pacific/All Other (–10.1 percent), and China (–14.0 percent), according to SIA.

Several semiconductor product segments stood out in 2023. Sales of logic products totaled $178.5 billion in 2023. Memory products totaled $92.3 billion. Microcontroller units (MCUs) grew by 11.4 percent to $27.9 billion. Sales of automotive ICs grew by 23.7 percent to $42.2 billion, SIA said.

Baburajan Kizhakedath