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Samsung could get up to $7 billion in subsidies for Texas expansion

The Samsung Taylor Texas premises

Two sources have disclosed to Reuters that the Biden administration is preparing to give Samsung up to $7 billion next week to help it expand its chip output in Taylor, Texas. To unlock this money, Samsung will be investing over $44 billion in the United States.

This revelation comes just a day after the Biden administration unveiled $6.6 billion for TSMC to expand its Arizona facilities. All these efforts are taking place under the CHIPS and Science Act in bid to diversify chip manufacture so that it’s not concentrated in Asia.

During the COVID-19 lockdowns there was a shortage of chips because of manufacturing mainly taking place in Asia where there were some strict lockdowns. By diversifying geographically, governments in the US and EU hope to avoid a repeat situation.

According to one of the sources, the subsidy will be unveiled by Commerce Department Secretary Gina Raimondo. It will be used to construct four facilities in Taylor, “including one $17 billion chipmaking plant that Samsung announced in 2021, another factory, an advanced packaging facility and a research and development center”. The source also said that there will be an investment in another undisclosed location.

While the motivation for these subsidies is pretty backwards looking with regards to the COVID-19 bottlenecks, the world is going to need to boost chip production in the coming years anyway so this a positive step towards that.

As we go forward, more and more things will need chips to make them “smart”. Over the last decade we’ve got a whole range of new products that didn’t really exist in much capacity before including tablets, smart watches, smart home products, car infotainment systems, and more.

Over the next decade, we’ll probably be wearing more VR devices and carrying AI-powered clip-ons which will also require chips and these new factories will facilitate that.

Source: Reuters

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