Semiconductors | Washington puts billions back on the table to support Samsung production

(Washington) Determined to reduce its dependence on advanced semiconductors, the United States announced Monday that it had granted up to $6.4 billion in subsidies to the South Korean giant Samsung to produce in Texas these components essential to new technologies.

“The Ministry of Commerce and Samsung Electronics signed a preliminary memorandum of understanding granting up to $6.4 billion in direct financing” of new factories, according to a ministry statement.

Samsung should invest “more than 40 billion dollars in the region in the coming years” thus allowing the “creation of more than 20,000 jobs”, added the ministry.

From cell phones to electric cars, including artificial intelligence and precision military equipment, semiconductors are essential.

The world’s top two makers of memory chips, including high-bandwidth memory chips (HBMs) used by AI, Samsung and SK Hynix, are based in South Korea.

Until now, the United States is very dependent on Asia for these components, and therefore vulnerable in the event of a geopolitical crisis, particularly in a region under high tension like that of Taiwan, an island over which China claims sovereignty.

The “central role” of Texas

The agreement concluded with Samsung will “seal the central role of Texas” in the semiconductor industry in the United States, welcomed American President Joe Biden in a press release.

“These facilities will support the production of some of the world’s most powerful chips, which are essential for technologies like artificial intelligence and will strengthen national security,” the statement added.

Under the latest agreement, Samsung will also expand its existing facilities in Texas, the Commerce Department said.

In addition to this expansion, “we will strengthen the local semiconductor ecosystem” in the United States, according to Kyung Kye-hyun, co-CEO of Samsung Electronics, quoted in the press release from the American ministry.

Last Monday, Taiwanese semiconductor giant TSMC announced the construction of a third factory in Arizona (west), bringing its total investment to $65 billion.

This announcement was based on a preliminary agreement with the Ministry of Commerce, linked to a major technology investment law, the “Chips and Science Act”.

Under the agreement, the company will receive up to $6.6 billion in direct financing and may benefit from an additional $5 billion in loans.

The “Chips and Science Act”, which dates from the summer of 2022, provides $52.7 billion to revive semiconductor production in the United States, with the idea that public money serves as a springboard for private investments.

Made in the USA

This law is emblematic of the industrial sovereignty strategy of Joe Biden, who will seek a second term in the presidential election in November.

The Intel group, for example, recently announced new production capacities in several American states, including, again, Arizona, with American aid of nearly 20 billion dollars, to enable the national giant to increase its production in the country.

This arid western land, where the Grand Canyon is located, for example, is one of these key states (swing states), where the November election will be played.

“We rely on a very small number of factories in Asia for all of our most sophisticated microprocessors. This is untenable and unacceptable,” Commerce Secretary Gina Raimondo said shortly before this announcement, before adding: “We must manufacture these chips in the United States.”

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