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Samsung’s upcoming US chip plant expected to cost more than $25 billion: All the details


The chip plant that South Korea’s Samsung Electronics Co Ltd is building in Taylor, Texas, will cost the world’s largest memory chip maker more than $25 billion (roughly Rs. 2,06,660 crores), up more than $8 billion (roughly Rs. 66,130 crores) from Preliminary forecasts, according to two people familiar with the matter.

The people said the cost increase was primarily due to inflation, and they declined to release their names because the information was not made public.

“The higher construction cost is around 80 percent of the cost increase,” said one of the sources. “The materials are becoming more expensive,” the source added.

Samsung did not immediately respond to a request for comment.

Chipmakers are bidding for billions in grants from the Biden administration thanks to the CHIPS Act, which aims to ramp up chip production in the United States. But the increased costs raise questions about how far these dollars will go. The bill was proposed in 2020, before the historic high inflation that US officials are still working to tame.

US Commerce Department officials said earlier this month that most government grants will only cover up to 15 percent of the cost of new plants. Meanwhile, in the three years since lawmakers first floated the $52 billion (about Rs. Direct factory construction, the labor cost has risen sharply, along with the prices of building materials such as steel.

This can drive up the cost of already huge spending plans. Last year, Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chip maker, announced that it had more than tripled the planned investment in a new plant in Arizona to $40 billion (roughly Rs. 3,30,670 crores). ).

Meanwhile, Intel announced a $20 billion (roughly Rs. 1,65,335 crores) chip factory in Ohio that could expand to a cost of up to $100 billion (roughly Rs. 8,26,715 crores). Also last year, chipmaker Micron said it plans to invest up to $100 billion over the next 20 years to build a computer chip factory complex in upstate New York.

Samsung, the world’s No. 2 nodal chip manufacturer, announces its factory in Taylor, Texas, in 2021. It aims to make advanced chips for functions such as artificial intelligence, 5G, and mobile phones, and promises to create 2,000 high-tech jobs. Unlike some of its competitors, Samsung is really getting started.

The company is rushing to finish the factory by 2024 so that it can produce chips by 2025, one of the sources told Reuters, which would put the company ahead of the 2026 deadline for securing tax credits on factory tooling.

Both sources said Samsung has already spent up to half of the $17 billion (about Rs. 1,40,540 crores) initially expected for Taylor’s site, and indicated that the company may eventually choose to build additional plants.

© Thomson Reuters 2023

Samsung’s Galaxy S23 series of smartphones was launched earlier this week and the South Korean company’s high-end phones have seen some improvements across all three models. What about the price increase? We discuss this and more on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcast.
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Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.