After TSMC, Samsung Announces Delay in Setting Up Chip Factory in US

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This is another setback in US’s goals of strengthening domestic semiconductor manufacturing to compete with China.

Samsung recently announced that it will postpone production at its new chip manufacturing facility in Texas until 2025, making it the second semiconductor giant to delay its assembly plans this year. The decision comes despite the Biden administration’s attempts to enhance domestic chip supplies. Initially, the South Korean electronics giant had plans to significantly ramp up production and manufacturing at its Taylor plant in the second half of 2024.

This comes as another setback in President Joe Biden’s efforts to promote the domestic production of semiconductor chips in the United States, amidst escalating tensions with China. His CHIPS Act, which was highly touted, has only allocated a mere 0.03% of the $100 billion designated for it since its enactment 16 months ago.

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Samsung Chip

Samsung’s delay follows a similar announcement by its top competitor, Taiwan Semiconductor Manufacturing Co. (TSMC), in July. TSMC, known for producing chips for tech giants like Apple and Nvidia, cited difficulties in finding skilled workers and higher-than-anticipated expenses as reasons for postponing production at its new Arizona facility from late 2024 to 2025.

These delays by the world’s leading contract chipmakers could undermine the administration’s goals of strengthening domestic semiconductor manufacturing to compete with China. President Xi Jinping of China recently conveyed his intention to end Taiwan’s de facto independence, potentially through peaceful means.

The bipartisan CHIPS Act was signed by President Biden in August 2022, driven by concerns that a Chinese military attack on Taiwan could disrupt the global supply of advanced computer chips and lead the U.S. into a recession. However, the government’s sole investment thus far has been a $35 million grant to BAE Systems, aimed at increasing chip production for military aircraft, including F-15 and F-35 jets, in a New Hampshire factory.

The choice of a military contractor by the Commerce Department, rather than a traditional chip manufacturer, underscores the law’s national security focus, as modern weapons systems increasingly rely on advanced chips that can be pivotal in both preventing and engaging in warfare.

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