Samsung to bring $17bn chip factory to Texas

Announcement comes on heels of Tesla's jump to Lone Star state

Samsung said it plans to build a $17 billion semiconductor factory in Texas amid a global chip shortage. REUTERS / Andrew Kelly

South Korean electronics company Samsung said that it plans to build a $17 billion semiconductor factory outside of Austin, Texas, amid a global shortage of chips used in phones, cars and other electronic devices.

“This is the largest foreign direct investment in the state of Texas, ever,” Texas Governor Greg Abbott said when announcing the project on Tuesday.

Samsung said it will start building the Texas plant next year and hopes to begin operations in the second half of 2024.

The tech company chose the site based on a number of factors, including tax breaks and the “readiness and stability” of local infrastructure, said Samsung Vice Chairman Kim Kinam, speaking alongside the Republican governor.

The White House said that US President Joe Biden's talks with South Korean President Moon Jae-in helped clear the way for the announcement.

The deal was “the result of sustained work by the administration, including engagement with Samsung” and Mr Biden’s encounter with Mr Moon, “where the two leaders announced they would facilitate mutual and complementary investments in semiconductors”, National Security Adviser Jake Sullivan and Brian Deese, the National Economic Council director, said in a joint statement on Tuesday night.

Samsung's plant would go a long way to "helping protect our supply chains, revitalising our manufacturing base and creating good jobs right here at home," they said.

They did not elaborate on what roles Mr Biden and Mr Moon played in bringing about Samsung’s decision.

The new plant is expected to create more than 2,000 skilled jobs.

The chips manufactured on the site will have applications in mobile technologies, 5G or even artificial intelligence, the group said. The plant will be built in the town of Taylor, near the capital Austin.

The company had previously explored sites in Florida, Arizona, New York and Austin, Texas, before deciding on Taylor.

Samsung said it expects to spend $17bn on the Texas project, which will make it the company’s largest investment in the US.

The company is the latest to come to the Texas capital: business software company Oracle and electric vehicle maker Tesla both announced they would be moving their headquarters from Silicon Valley to Austin.

Meanwhile, Tesla filed on Monday for approval of the first phase of its Giga Factory Texas with the state’s Department of Licensing and Regulation, which will cost roughly $1.1bn, with the hope that construction on several major elements will be completed by year's end.

Samsung said it plans to invest $150 billion globally over the next decade in developing its line of memory chips, with a potential US manufacturing expansion if tax credits can help make up for the higher costs of American manufacturing.

Agencies contributed to this report