Samsung intends on spending $17 billion to build a new chip factory in Texas

Samsung (KRX:005930) plans to spend $17 billion on a new chip plant in Taylor, Texas, to try to tackle the global semiconductor chip shortage and increase its manufacturing capabilities. They plan to have this new factory up and running in the next three years or so. 

The tech giant based in South Korea announced that it would build the five million square meter plant just one day after the news was published in the Wall Street Journal. The new factory is meant to help the company increase its production of the advanced semiconductors used in both computers and phones. 

Its U.S based business operations 

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Samsung started operating in the United States in 1978. It employs more than 20,000 American citizens across the entire nation. The company’s latest investment will bring its total investment in the country to over $47 billion.

The new factory in Texas will help expand its geographic diversity. Top officials in the company felt that the lack of diversity hurt the company when the coronavirus pandemic, and this is why they decided to make a big move like this. 

Samsung Electronics DSD’s (Device Solutions Division) Chief Executive Officer and Chairman, Kinam Kim, claimed that the new chip facility in Taylor, Texas, will help the company better serve its customers’ needs. The CEO said that it would also help them tackle the global advanced semiconductor supply chain problem. 

Kinam Kim added that he was both delighted and grateful for the support the company has gotten from partners in Texas and the U.S President, Joe Biden, himself. 

How do financial experts feel?

Gartner’s VP of emerging trends and technologies, Alan Priestley, spoke to CNBC and told them that the company has an established ecosystem of suppliers and partners in Texas because of the factory it already set up in nearby Austin. 

Mr. Priestley said:

“A lot of semiconductor companies have development sites in Austin so it’s a good pool of resource.” 

The Vice President at the famous analyst firm added:

“As with any major investment like this there were no doubt local incentives (tax breaks, financing etc) to encourage Samsung to build in Texas.”