① Shutdown in’cold wave’, Samsung reviewed in’origin’
② Tax benefits are better in Arizona than in Texas?
③ Biden competes to attract the state government to the semiconductor executive order
A view of Samsung Electronics’ factory in Austin, Texas. Provided by Samsung Electronics.
Samsung Electronics was in deep trouble over the site of a semiconductor plant that Samsung Electronics is considering additional expansion in the US with a scale of about 10 billion dollars (about 11 trillion won). The area around the existing Austin, Texas factory site seemed to be virtually dominant, but Arizona is on the rise, given the recent cold wave in the area, tax support from the state government, and investment by rival TSMC.
According to industry sources on the 7th, the Wall Street Journal of the United States recently reported that “Samsung Electronics is investing up to 17 billion dollars (about 18 trillion won) to build factories in Phoenix, Arizona, Austin, Texas, and Genesis County, New York.” . The Wall Street Journal and other local media have mentioned Austin, Texas as a candidate for Samsung Electronics’ foundry expansion so far, but Arizona and New York are additionally being discussed in recent reports. Samsung Electronics is still in the position that “the size and location of the investment, as well as whether or not to invest, has not been decided.”
A vehicle is passing by a road next to a snow-covered power plant in Odessa, Texas. AP provided.
The recent detection of such a change in airflow does not seem to have anything to do with the cold wave that has hit the Texas area. Samsung Electronics is currently operating a 14-nano process semiconductor foundry plant in Austin, Texas, and this cold wave disrupts the supply of electricity and water essential for semiconductor production, and the scale of losses is increasing like a snowball. The factory, which generates 10 billion won in sales a day, is estimated to have suffered a loss of about 200 billion won to date. Even if the water and power supply are normalized, it is unlikely that semiconductor production will be smooth for the next two to three months, as a semiconductor factory that has stopped once requires elaborate and detailed line inspection.
In this case, it is observed that the damage to Samsung Electronics’ Austin plant could increase to more than 1 trillion won. This is also the reason Samsung Electronics dispatched more than 100 engineers in Korea to Texas to normalize its fab (semiconductor factory). This cold wave in Texas occurred when the cold energy that had stayed in the Arctic due to climate change was pushed down, but from the perspective of Samsung Electronics, there is no guarantee that this will not happen again at any time. It seems difficult for a semiconductor fab that needs to operate steadily and stably 24 hours a day, 365 days a year more than any other plant to bear this risk.
A bird’s-eye view of the fab that TSMC, the world’s No. 1 foundry company, decided to build in Phoenix, Arizona. TSMC.
The fact that rival TSMC is continuing its investments with active “rear support” from Phoenix, Arizona is another reason Samsung Electronics is turning its attention to regions outside of Texas. First of all, Arizona is known to have significantly lower taxes to the state than Texas. TSMC, which announced additional expansion in the U.S. last year, significantly increased its investment from $12 billion to a maximum of $35 billion (approximately 40 trillion won), because Phoenix, Arizona, is giving large incentives by investing the local government budget. It is for this reason that Samsung Electronics presented a specific’invoice’ to Austin, Texas, which is a tax reduction of $85.5 million (about 900 billion won) over the next 20 years. The tax cut is reportedly requested for $87.2 million in Austin and $718.3 million in Travis County, Texas.
On the 24th of last month (local time), U.S. President Joe Biden is holding a semiconductor chip before signing an executive order at the White House to urgently inspect the supply chain of four items: semiconductors, vehicle batteries, medicines, and rare earths. Reuters.
In response to the city’s active support, TSMC announced plans to recruit more than 1,000 engineers to local recruitment. TSMC is constructing a fab capable of 5-nano process in this area with the goal of completion in 2024. The fab, which is connected with 5 nano and 3 nano, is considered as a core factory where TSMC can win the victory in the ultra-fine process competition with Samsung Electronics in the future.
It is known that Samsung Electronics recently delivered a revised letter of intent to the city of Austin, Texas, stating that if the fab expansion is not provided, it can move the expansion area if tax reduction is not provided. In the statement of intent for investment, Samsung Electronics said, “We are evaluating candidate sites based on four criteria: accessibility of engineers, existing semiconductor manufacturing ecosystem, distance from the market, and public and private partnerships.” He added that “Texas’ high taxes are a factor to consider.” There are many observations that if Samsung Electronics, which has not yet been able to catch up with TSMC in high-tech process orders, will target completion earlier than TSMC if it expands its fab in the US. At present, each state government in the United States has entered a race to secure a semiconductor factory on the 24th of last month (local time) when US President Joe Biden signed an executive order to review the semiconductor supply chain. Samsung Electronics also has a predominant prospect that it will decide where to expand in the near future to keep pace with the strategy of the Biden administration.
Reporter No Jeong-dong Hankyung.com [email protected]
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