Samsung Electronics and Texas Instruments completed final agreements to get billions of dollars of government support for new semiconductor plants in the US, cementing a major piece of the Biden administration’s Chips Act initiative.
Under binding agreements unveiled on Friday (Dec 20), Samsung will get as much as US$4.8 billion in funding and Texas Instruments stands to receive US$1.6 billion – money that will help them build facilities in Texas and Utah. The final deals mean the chipmakers can begin collecting the funding when their projects hit certain benchmarks.
Though the terms of Texas Instruments’ final agreement is in line with a preliminary deal, Samsung is getting substantially less than originally expected.
“Our mid-to-long-term investment plan has been partially revised to optimise overall investment efficiency,” Samsung said in a statement, indicating that its project won’t be as large as originally planned. “Incentives have been allocated through rigorous negotiations with the US government. We are not able to disclose details of the agreement at this time.”
The Chips Act, signed into law by President Joe Biden in 2022, set aside US$39 billion in grants, loans and loan guarantees worth US$75 billion, and 25 per cent tax credits. It aims to boost American semiconductor production after decades of manufacturing shifting abroad. Officials have divvied up most of that money, with Commerce Secretary Gina Raimondo racing to finalise as many deals as possible before leaving office.
The latest awards round out the programme’s biggest grants, helping ensure that there’s comprehensive local production of semiconductors. Texas Instruments is the largest maker of analog chips and embedded processors. Samsung is the world’s top maker of memory chips and a major provider of advanced outsourced production for other companies.
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Texas Instruments and its peers focus on so-called legacy chips, which don’t require the most advanced production but are increasingly important to the economy and defense. They’re used in everything from military equipment to household electronics.
Today’s vehicles, for example, require a host of sensors, power converters, power management and motor-control chips to bridge the gap between the digital and real world.
China has boosted its manufacturing capacity of analog and embedded chips, attempting to be more self-reliant in this vital area. That’s made it all the more important for the US to do the same.
Texas Instruments’ award will help fund three new large plants: two in Sherman, Texas, and one in Lehi, Utah. They will create 2,000 new positions for the Dallas-based company, Texas Instruments said.
Samsung is expanding its facilities in central Texas. That will include work on so-called logic chips – components that act as the brains of systems – and a research and design facility in Taylor. The company also will be expanding an existing site in Austin.
Texas Instruments has said it plans to spend about US$40 billion to build five new US factories: one in Utah and four in Texas. The government funding supports just the first two Texas factories, since officials are prioritising projects that will be in production by the end of the decade.
Beyond the grants announced on Friday, the company also expects to receive as much as US$8 billion in Chips Act tax credits, which can be applied to construction and tooling expenditures. BLOOMBERG
