The Biden administration’s Chips Act initiative achieved a significant milestone with Samsung Electronics Co. and Texas Instruments Inc. finalizing agreements for substantial government funding to construct new semiconductor plants in the US. These agreements solidify a crucial step towards bolstering domestic chip production.
Under the binding agreements announced, Samsung will receive up to $4.75 billion, while Texas Instruments will get $1.6 billion. This funding will support the construction of facilities in Texas and Utah. The finalized deals enable the chipmakers to access the funding upon reaching specific project milestones. While Texas Instruments’ final agreement aligns with the preliminary deal, Samsung’s funding is notably less than initially anticipated.
Samsung acknowledged a revision in its investment plan, citing optimization of overall investment efficiency. The company stated that the incentives were allocated through rigorous negotiations with the US government but declined to disclose further details. The 2022 Chips Act, signed by President Biden, allocated $39 billion in grants, loans, and loan guarantees totaling $75 billion, along with 25% tax credits. The act aims to revitalize American semiconductor production after decades of offshoring.
These substantial grants mark the completion of the program’s largest funding allocations, ensuring comprehensive domestic semiconductor production. Texas Instruments, the leading producer of analog chips and embedded processors, and Samsung, the world’s top memory chip manufacturer and a major provider of advanced outsourced production, play pivotal roles in the semiconductor industry.
TI and its counterparts concentrate on legacy chips, essential components for various sectors, including defense and consumer electronics. Although not requiring the most advanced production techniques, these chips are increasingly critical to the economy. Modern vehicles, for instance, rely heavily on sensors, power converters, power management, and motor-control chips, highlighting the importance of these seemingly less sophisticated components.
China’s efforts to increase its analog and embedded chip manufacturing capacity underscore the urgency for the US to strengthen its domestic production capabilities in this vital area. The Chips Act funding directly addresses this national security and economic imperative.
In a separate announcement, the Commerce Department confirmed a $407 million direct funding allocation to Amkor Technology Inc. This funding will support Amkor’s investment in advanced packaging capacity in Arizona. As chip complexity increases, advanced packaging, which involves intricate connection technologies, is gaining significance. This sector has increasingly shifted to lower-cost overseas locations, making Amkor’s US expansion crucial.
Texas Instruments’ award will facilitate the construction of three new large plants: two in Sherman, Texas, and one in Lehi, Utah. These facilities are projected to create 2,000 new jobs. Samsung’s expansion in central Texas will encompass logic chip production—the core processing components of systems—and a research and development facility in Taylor, along with expansion at its existing Austin site.
Texas Instruments’ ambitious plan to invest approximately $40 billion in five new US factories, one in Utah and four in Texas, underscores the company’s commitment to domestic production. The government funding currently supports the first two Texas factories, prioritizing projects with production timelines within this decade.
In addition to the grants, Texas Instruments anticipates receiving up to $8 billion in Chips Act tax credits applicable to construction and tooling expenses. These combined incentives significantly bolster the company’s investment in US semiconductor manufacturing.
These strategic investments fueled by the Chips Act signify a pivotal moment for the US semiconductor industry, positioning American companies for leadership in this critical sector. The funding not only strengthens domestic production but also stimulates job creation and fosters innovation, contributing to long-term economic growth and national security.
