Envisions an Additional Investment of US$192.1bn

The site of Samsung Electronics’ second foundry in Taylor, Texas of the United States

Samsung Electronics is expanding its investment in the United States, responding actively to "friendshoring" pursued by U.S. President Biden. Friendshoring is an attempt to reorganize the global supply chains disrupted by Russia's invasion of Ukraine in cooperation with allies and partners.

Samsung Electronics said in a second quarter earnings conference call that it would reconsider short-term facility investments as global economic uncertainties will grow further in the second half of this year. But it added that it would steadily expand investment in the United States.

The company is operating two semiconductor fabs in Austin, Texas. In November last year, it decided to build a new factory in Taylor, Texas, at the cost of US$17 billion. Currently, it is expected to start construction work soon. The planned factory in Taylor is 40 km away from the Austin, Texas factory. It will produce chips for 5G, artificial intelligence (AI), high-performance computing (HPC) devices. The Taylor factory is about five million square meters, about four times larger than the current Austin factory.

In addition, Samsung Electronics recently disclosed its plan for additional investment in semiconductors through an application for tax benefits submitted to the Texas state government. It envisions establishing 11 semiconductor factories in Texas by investing US$192.1 billion over the next 20 years.

The company said it would invest US$167.6 billion to build nine new factories in Taylor and another US$24.5 billion to set up two plants in Austin. When implemented as planned, the scheme will create about 10,000 jobs. Some plants will be completed around 2034 and start production, with the rest to be built over the next 10 years.

The U.S. State of Texas is implementing Chapter 313, an incentive program that provides 10 years of tax relief for investments of a certain amount or more, but the program will expire later this year. Since some benefits are not provided if an investment plan is not disclosed, Samsung appears to have applied for the program with a future investment plan.

Industry watchers say that the Korean government needs to keep a close eye on the direction of future investments by global semiconductor companies, as there is a high possibility of investments planned to be made in Korea being diverted to the United States as the U.S. Congress passed the US$52 billion semiconductor support law.

“Recently, the Korean government announced that it will raise the tax credit for large corporations’ facility investment from 6 to 10 percent to 8 to12 percent, but this policy is not enough," said an industry analyst. "It is high time for the Korean government to give much more benefits to Korean companies as Korea’s rival countries such as the United States, the EU and Japan are expanding their incentives.”

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