Samsung to more than double investment in Taylor fab

[Graphics by Song Ji-yoon and Yoon Yeon-hae]

South Korea’s Samsung Electronics Co., the world‘s largest chipmaker, has decided to more than double its investment in a semiconductor production plant currently under construction in Taylor, Texas, the United States. The Taylor facility will operate as a foundry (semiconductor contract manufacturing) facility catering to orders from local U.S. companies.

Samsung’s decision to expand its foundry production facility in the United States and apply the latest processes to the facility signifies its intention to catch up with the Taiwan Semiconductor Manufacturing Co. (TSMC), the current leader in the foundries sector, from a foothold in the U.S. market.

According to a Wall Street Journal (WSJ) report last week, Samsung Electronics decided to more than double the funds allocated to the Taylor plant from $17 billion to $44 billion.

Samsung announced an investment of $17 billion in 2021 to construct a semiconductor plant in Taylor, Texas, and is currently building the Taylor plant with the goal of commencing production in 2024.

According to industry sources on Sunday, Samsung Electronics will announce additional investment plans related to the Taylor plant on April 15th, 2024 (local time), while the U.S. government is also expected to announce the scale of its semiconductor production support for the Taylor plant on the same day.

The Korean company plans to invest $20 billion in the plant to open a second fab (production facility) and $4 billion to establish an advanced packaging facility, according to the WSJ report. Samsung is also reportedly planning to construct a new research and development (R&D) facility in Taylor.

There is speculation that the U.S. government subsidies that Samsung Electronics will receive could exceed $6 billion after the government reached a preliminary agreement in March 2024 to provide Intel Corp. with up to $8.5 billion in direct subsidies and $11 billion in loans. TSMC is also expected to receive subsidies around the same time as Samsung Electronics.

Samsung aims to bolster its local production system via this additional investment and actively target big tech companies with high demand for artificial intelligence (AI) semiconductors. The Korean chipmaker plans to apply its state-of-the-art processes at the Taylor plant, reflecting its determination to catch up with TSMC and outpace Intel, which has emerged as a competitor in the foundry industry.

Samsung Electronics, which was the first among competing companies to apply gate-all-around (GAA) technology to the 3nm process, aims to apply the technology to the 2nm process in 2025 once production stabilizes.

GAA technology is superior to conventional FinFET technology in power consumption and performance, with TSMC also aiming to use GAA technology from the 2nm process. The semiconductor industry expects Samsung Electronics to apply 3nm GAA technology at the Taylor plant.

Samsung also plans to attract companies with high demand for AI semiconductors, such as Nvidia Corp. and Advanced Micro Devices Inc. (AMD), by providing a one-stop service that includes not only semiconductor foundry production but packaging for AI semiconductor chips in the North American region as well.

Packaging technology, which connects multiple semiconductors vertically or horizontally to manufacture another semiconductor, recently emerged as a key competitiveness in the semiconductor industry. Samsung Electronics created an Advanced Packaging (AVP) team in 2023 to capitalize on this trend.