The company’s move comes at a time when there is a global demand for chips to growing requirement for consumer and telecom equipment. The tech giant is seeking combined tax abatements of $805.5 million over 20 years from Travis County and the city of Austin, among other tax breaks, according to the documents.
According to a company filing, Samsung said if Austin is selected, the company would break ground on the site in the second quarter of this year and that the plant will become operational in the third quarter of 2023.
“This project is highly competitive, and the company is looking at alternative sites in the US including Arizona and New York, as well as abroad in Korea…,” Samsung said in the documents, adding that it is taking into account access to talent, chip ecosystem and speed to market in its evaluation of the sites.
Samsung decision comes at a time when there is a shortage of chips/semiconductor availability globally as there is a spurt in demand for automotive industry to manufacture phones and game consoles. This scenario is further cemented during the post-Covid environment.
Samsung’s American customers for its contract manufacturing chip business include Tesla Inc, Qualcomm Inc and Nvidia. Samsung’s filing said it plans to make “advanced logic devices,” meaning it would aim to make the smallest, fastest kinds of computing chips for customers. The company has an existing chip plant in Austin that makes computing chips.
In a statement to Reuters, Samsung confirmed it is considering expanding its chip facilities, but no decision has been made yet. The documents say the project would involve building out 7 million square feet (650,000 square meters) of new space on a 640-acre (259-hectare) site that the company already owns.
US Senate Majority Leader Charles E. Schumer, called on Samsung to put a factory in his home state of New York, pledging to work to secure federal incentives for the facility, which he said are key for U.S. to compete with China in boosting local chip production.
The semiconductor industry is the aggregate collection of companies engaged in the design and fabrication of semiconductors. It formed around 1960, once the fabrication of semiconductor devices became a viable business. The industry’s annual semiconductor sales revenue has since grown to over $481 billion, as of 2018.
According to a recent Bloomberg report, world’s largest mobile chipmaker Qualcomm Inc’s head Cristiano Amon, came up with a serious shortage “across the board,” the company is facing and he highlighted the fact that the industry’s heavy reliance on just a handful of players in Asia.
According to Arvian Research, besides the global impact of Covid-19 pandemic and rampant implementation of social distancing in chip manufacturing companies virus pandemic, chip demand is facing facing huge demand from tablet, laptop and electric car manufacturers.
“It is interesting to note that smartphone compoenets, primarily chipsets and displays have risen as much as 15% during the past six month. This is really due to the pent up demand and it will likely to go up as there is a surge in demand from consumption hungry middle class across the globe for new electronic equipment to meet their daily life,” said Arvian Research official.