Source: Zhitong Finance

The US Department of Commerce said on Monday local time that the government will provide direct subsidies of up to 6.4 billion US dollars to South Korean chip manufacturing giant Samsung Electronics to further expand Samsung's chip factory manufacturing capacity in central Texas. This is part of the US government's broader effort to boost the return of the chip manufacturing industry to the US. The funding provided by the government will also support this chip maker to establish a 2nm advanced chip production line in the US. The ultimate goal is to once again establish the US as a chip manufacturing powerhouse and accelerate the “return of chip manufacturing to the US” expected by the Biden administration.

According to information, government funding from the “Chip and Science Act” passed by the US Congress in 2022 will be used to support Samsung to build two large-scale chip manufacturing plants, an R&D center, and an advanced packaging factory in Tyler, Texas, while expanding Samsung's original Austin chip factory.

US Secretary of Commerce Gina Raimondo (Gina Raimondo) told reporters that this funding will also enable Samsung to expand the production capacity of its chip factory in Austin, Texas, while increasing chip production in the aerospace, defense, and automotive industries, and strengthening national security cooperation.

“[These investments] will enable the US to once again lead the world in technology, not only in chip design, but also in chip manufacturing, advanced packaging, and R&D,” Raymondo said.

Samsung Electronics Co-CEO Qing Guixian said, “In order to meet the anticipated surge in demand from American customers for future products such as AI chips, our chip factory will be equipped with the most advanced chip process technology and help bring security to the US semiconductor supply chain.”

Samsung brings “2nm process process+HBM chip packaging production capacity” to the US

Samsung Electronics said the new chip factory is expected to start chip production as early as 2026. Analysts generally expect that Samsung may initially produce chips based on the 4nm process on its pilot production line and eventually expand to a more advanced 2nm chip process.

The newly built plant is located in Tyler, Texas, USA. Samsung will build a complete chip R&D and manufacturing ecosystem in Tyler, including an R&D facility dedicated to the “advanced generation” compared to current process nodes, and two factories focusing on large-scale production of 4nm and subsequent 2nm process chips. There is also a packaging factory that performs 3D advanced packaging for HBM storage systems, and a packaging factory with 2.5D advanced packaging capabilities. Both items are currently urgently needed production capacity for AI chips such as Nvidia and AMD. Currently, the production capacity of these two major advanced packaging is basically concentrated on TSMC.

According to media reports, in addition to the US$6.4 billion direct funding mentioned in the subsidy agreement, Samsung also plans to apply for investment tax credits from the US government, which is expected to cover about 25% of capital expenditure.

According to a senior US official, through this subsidy, Samsung has increased its investment in US chip factories from 17 billion US dollars to nearly 45 billion US dollars, and Samsung is expected to invest about 45 billion US dollars to build and expand all of its factories in Texas by 2030.

“By supporting global chip companies to invest in cutting-edge chip manufacturing, we are helping to ensure the completion of this fragile supply chain, improve our national security and global competitiveness, and create new jobs for Texas.” Texas Republican Senator John Cornyn (John Cornyn) emphasized that he was a co-sponsor of the original chip bill.

SIA (American Semiconductor Industry Association) said in a statement: “We appreciate Samsung's bold investment in the US manufacturing industry and salute the significant progress made by the US Department of Commerce in implementing the CHIPS Act (CHIPS Act) manufacturing incentives and R&D programs.”

The pace of “chip manufacturing returning to the US” is rapidly accelerating! Intel and TSMC have previously received subsidies up to

Supporting Samsung to establish large-scale chip factories and advanced packaging factories in the US can be described as the latest move taken by the Biden administration to develop the US chip manufacturing industry. As a result, Samsung became the third chip manufacturer to receive high subsidies.

As the world's top three chip makers — TSMC, Intel, and Samsung — have received high subsidies from the US government, the pace of “chip manufacturing returning to the US” can be described as rapidly accelerating. According to statistics from the American Semiconductor Industry Association (SIA), America's share of global semiconductor manufacturing capacity has declined from 37% once reached in 1990 to only 12% in 2020. Former US President Trump and current President Joe Biden have made chip manufacturing back to the US an important task during their term.

Since Biden took office, chip companies from around the world have announced investments of more than 200 billion US dollars in the US, with the largest share of investment concentrated on chip manufacturers such as TSMC and Samsung, with the largest clusters in Arizona, Texas, and New York. Direct subsidies of about US$21.5 billion received by TSMC, Intel, and Samsung account for nearly 55% of the total chip factory subsidies under the Chip Act.

Nearly 2 years after the introduction of the US government's “Chip Act”, established chip giants$Intel (INTC.US)$In March, it was announced that it would receive up to 8.5 billion US dollars in government subsidies and up to 11 billion US dollars in special loan support. According to information, the subsidy support received by Intel comes from the “Chip Act” introduced by the Biden administration in 2022. The bill aims to help chip companies build more chip factories in the US and make the US a chip manufacturing powerhouse. Intel can currently be described as the biggest beneficiary in the context of “the return of the chip manufacturing industry to the US.”

TSMC officially received high subsidies not long ago, marking another important milestone in the development of the US chip manufacturing industry through the “Chip Act” promoted and passed by the Biden administration in 2022. That is, chip companies from abroad are also expected to receive high subsidies. The US government plans to provide TSMC, which has the title of “King of Global Foundry,” with direct grants of up to US$6.6 billion and loans of up to US$5 billion to support the world's largest chip manufacturer to establish a 5nm and below advanced chip factory in Arizona, USA.

According to a preliminary agreement recently announced by the US government, TSMC will build a third large-scale chip factory in Phoenix, Arizona's largest city. The first and second large-scale chip plants previously announced in the state are expected to be put into large-scale operation in 2025 and 2028, respectively. TSMC is the core chip foundry for US chip design giants such as US tech giants Apple, Nvidia, and AMD. The US government's total subsidy program will support TSMC's investment in these three US chip factories of more than 65 billion US dollars.

According to information, TSMC's third chip manufacturing site in the US will use next-generation 2nm process technology and is scheduled to be put into operation by 2030. TSMC's first and second chip factories in Arizona, USA, focus on 5nm and below advanced process chips, and are expected to focus on 3nm advanced manufacturing processes.

The current demand for AI chips can be described as extremely strong, and this will probably be the case for a long time to come, and the AI chip manufacturing process mainly focuses on advanced processes at 5nm and below. According to the latest forecast from market research firm Gartner, the AI chip market size will increase 25.6% over the previous year to reach US$67.1 billion by 2024. It is estimated that by 2027, the AI chip market is expected to be more than double the size of 2023, reaching US$119.4 billion.

Zhang Zhongmou, the “father of TSMC,” recently stated at the opening ceremony of TSMC's first chip manufacturing plant in Japan that according to his discussions with executives of the world's top chip companies, there is currently huge global demand for chip production capacity, including AI chips. Zhang Zhongmou said, “Almost all of these top chip companies are talking. They need us to establish more chip manufacturing plants around the world. The demand is not tens of thousands or hundreds of thousands of wafers, but three, five, or even ten large chip factories.”