US grants to help Samsung expand semiconductor production
Korean company Samsung will receive US grants to expand its chip production. According to the agreement between the parties, the US government will provide US$6.4 billion. The money will be for the construction of industrial facilities in Texas.
The company will receive a grant under the Chips and Science Act initiative. The Chips and Science Act aims to expand semiconductor manufacturing in the United States. The programme includes an investment allocation of US$52 billion.
White House spokeswoman Lael Brainard is optimistic about the partnership. Cooperation with the global giant Samsung will help the country regain its importance in chip production. The grant will expand production at two facilities in Texas and support a research unit and a packaging plant.
Samsung, in turn, plans to expand its operations in the country. The company plans to invest around US$45 billion in constructing new industrial facilities in Texas.
It is worth noting that the Korean company is not the only one that has received a subsidy from the US government. The White House intends to offer subsidies similar to those of other manufacturers, including Intel and Taiwan’s TSMC. Intel has approved projects to build facilities worth US$43.5 billion. TSMC plans to build two factories with a total investment of US$40 billion.
The government also approved a US$6.2 billion grant for Micron. The local company plans to build four facilities in upstate New York and a new facility in Idaho.
Government goals
During the pandemic, the world experienced a catastrophic shortage of semiconductors. This was due to several factors:
1. Closed borders disrupted supply chains and reduced overall production.
2. Demand for electronic products, of which chips are a key component, increased significantly.
3. At the same time, governments have realised the gravity of their dependence on overseas manufacturing.
This became particularly apparent with the escalation of the trade dispute between the US and China. As a result, the US authorities encouraged expanding the semiconductor industry in their territory. Other countries followed suit. Many of them offer various incentives for opening new chip factories.
Joe Biden signed the Chips and Science Act in 2022 to stimulate the industry. In addition to subsidies, it includes loans to build new plants at 25% interest. The initiative will provide US$200 billion for scientific research in the sector, divided into tranches over 10 years.
