Samsung Electronics' 20 Trillion Investment Gift, Will It Unfold in Austin, USA?

Foundry Plant Expansion Candidate Site
Arizona Land Auction Fails Again

Samsung Electronics Building, Seocho-gu, Seoul [Image source=Yonhap News]

[Asia Economy Reporters Heungsun Kim and Hyunjin Jung] Samsung Electronics is leaning toward Austin, Texas, as the candidate site for its foundry (semiconductor contract manufacturing) plant, where it is considering investing over 20 trillion won for expansion in the United States. The site selection process in Arizona, which was also considered a strong candidate along with Austin, is stalling. On the 21st (local time), amid expectations that Samsung will unveil a 'gift package' related to its U.S. investment during the Korea-U.S. summit, attention is focused on whether Samsung will finalize negotiations on incentives with Austin and select it as the investment location.

According to related industries and foreign media on the 20th, the Arizona Department of Land held a second auction on the 19th for two sites in Goodyear and Queen Creek, both of which failed. The two sites are designated foreign trade zones measuring 1,100 acres (about 4.45 million square meters) and 946 acres (about 3.83 million square meters), respectively. Previously, it was widely expected that if Samsung Electronics chose Arizona as the semiconductor plant investment location, it would likely purchase these sites.

Higher Possibility for Austin

After the sites failed to sell once last month, the second auction was held on this day, but again no bidders appeared. This is the background for analyses suggesting that Samsung's investment possibility in Arizona is slim.

Since last year, Samsung Electronics has been considering building new facilities not only in Austin, where its U.S. foundry plant is located, but also in Arizona and New York. With President Joe Biden's inauguration and the U.S. administration's move to reorganize the semiconductor supply chain under U.S. leadership, state governments have also offered incentives such as tax benefits, sending 'love calls' to attract Samsung's factories.

If Arizona falls out of the running, the most likely candidate is undoubtedly Austin. Since January, Samsung Electronics has submitted a letter of intent to the Texas state government and local governments near Austin, requesting tax reductions totaling $805.47 million (about 907 billion won) over 20 years, and is conducting detailed negotiations. Related industries expect Samsung's investment plan to be concretized around this Korea-U.S. summit.

Attention on Whether Final Investment Location Will Be Decided at Korea-U.S. Summit

Last month, Samsung Electronics was the only Korean company to participate in a semiconductor supply chain video conference held at the White House with President Biden in attendance, and on the 20th, it was invited to a semiconductor video conference hosted by the U.S. Department of Commerce. Taiwan's TSMC, the world's No. 1 foundry and Samsung's competitor, has already decided to invest up to $12 billion (about 14 trillion won) to build a 5nm (nanometer; 1nm = one billionth of a meter) process production line in Phoenix, Arizona. It is also considering an additional investment of 26 trillion won to add a 3nm process line.

Currently, the only companies capable of contract manufacturing semiconductors at the cutting-edge 5nm or below process are TSMC and Samsung Electronics worldwide. Accordingly, there are prospects that Samsung may expand its fine process production line in Austin. Regarding this, Samsung Electronics stated, "The U.S. investment plan is under review, and no specific details have been decided."

This content was produced with the assistance of AI translation services.