Samsung Considers New York, Arizona As Alternatives For 3nm $17 Billion U.S. Chip Plant

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Korean tech giant Samsung Electronics has shared details regarding its plans to expand its manufacturing facility in Austin, Texas. The company's plant in the city is currently responsible for manufacturing chips with the 14nm process node, and Samsung hopes to expand this to 3nm with the new facility. Reports of discussions between city officials and the company have suggested that Samsung is asking for tax breaks up to $800 million spread over 20 years as it promises 1,800 new jobs during the first decade of the plant's operations.

Samsung 'Keeping Options Open' For Choosing Site For Its High-End U.S. Chip Manufacturing Facility

Samsung's comments, reported by Korea Times, suggest that the company is keeping its options open for the new chipmaking facility's construction site. Discussions between management and Austing officials are currently ongoing and the company is yet to reach a final decision for its site.

In addition to Austin, Samsung is also considering New York and Arizona for its fab, with company officials confirming that it is also conducting discussions with the governments of both cities. Factors such as infrastructure are behind Samsung's decision to evaluate several American cities for a chip plant.

A Samsung representative elaborated to Korea Times that:

"We are reviewing all sites with the same level of possibility. Texas is not the only candidate we are considering, given that infrastructure and other factors are also important."

However, interestingly, the primary agenda for the company's ongoing discussion with Austin officials isn't energy or infrastructure. Samsung's facility in Austin shut down production in mid-February as a state-wide power outage plunged it into darkness. Since then production has not resumed due to the time required to restart the facility.

Following the outage, Samsung submitted an updated tax proposal to Austin authorities, where it shared more details about alternative venues for its new plant. In this proposal, it stated that it was reviewing one site in New York and two in Arizona.

Samsung's facility in Austin, Texas. Image: Ricardo Brazil/American-Statesman

As the Korean tech chaebol deliberates on where to build the $17 billion plant, evaluating multiple options for the site gives it leverage over city governments. Right now, it appears as if Austin is Samsung's first choice owing to the ease in setting up a new plant due to existing operations. Yet, the tax breaks that it is asking for are high and are likely to raise eyebrows across the city and the state.

An important factor bout the plant is Samsung's plans to build chips using the 3-nanometer (nm) node with it. Should the company successfully achieve this, then it will have established one of the most advanced chip manufacturing facilities in the U.S.

Samsung's rival in the contract chip manufacturing space, the Taiwan Semiconductor Manufacturing Company (TSMC) also plans to build a chip facility in the U.S. However, this facility plans to build chips with the older 5nm node, with TSMC expecting it to go into production in 2024. Rumors have suggested that the Taiwanese company is hoping to increase the scope of this facility from an initial $12 billion to $35 billion - yet officials from Auston or TSMC are yet to publicly comment on these.

TSMC is the world's largest contract chip manufacturer owing to large orders from Cupertino tech giant Apple Inc and the chipmaker's quick progress in advancing chip technologies. It is moving forward to build a 3nm plant in Tainan, Taiwan, and it also plans to build a 2nm facility in Hsinchu, Taiwan - with plans for the latter awaiting environmental approval.

The author has no position in any of the stocks mentioned. WCCF TECH INC has a disclosure and ethics policy.
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