Samsung Electronics Confirmed $20 Trillion Investment in the US... Expected to Receive Incentives Worth 5 Trillion Won [Biz View]

Samsung Electronics Vice Chairman Lee Jae-yong is returning to Korea through the Seoul Gimpo Business Aviation Center after a ten-day business trip to the United States on the 24th. On the same day, Samsung Electronics made a final announcement to establish a foundry (semiconductor contract manufacturing) plant worth 20 trillion won in Taylor, Texas, USA. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Kim Heung-soon] Samsung Electronics has decided to build its second foundry (semiconductor contract manufacturing) plant in Taylor, Texas, with an investment of $17 billion (approximately 20 trillion KRW), and it is expected to receive considerable incentives from the United States. Industry insiders anticipate incentives worth around $4 billion (approximately 4.8 trillion KRW), including direct and indirect support.

According to industry sources on the 28th, Samsung Electronics is expected to receive incentives from local governments such as the state of Texas and the city of Taylor, as well as federal government subsidies, as it builds the new foundry plant in Taylor.

Earlier, in September, the city of Taylor passed a support measure to reduce property taxes on the land Samsung Electronics will use by 92.5% for the first 10 years, 90% for the following 10 years, and 85% for the subsequent 10 years. The Taylor Independent School District, another negotiating party, also agreed to exempt education taxes worth $300 million (approximately 358.8 billion KRW).

Additionally, the Texas state government decided to provide a subsidy of $27 million (approximately 3.2 billion KRW) through the Texas Enterprise Fund (TEF) to create jobs. An additional veteran hiring subsidy worth $20,000 (approximately 2.38 million KRW) was also proposed. Combining these incentives, the total is estimated to be around $1 billion (approximately 1.2 trillion KRW).

Samsung Electronics is also expected to receive semiconductor investment subsidies from the U.S. federal government. The "U.S. Innovation and Competition Act," which allocates a total of $250 billion (approximately 300 trillion KRW) to semiconductors, 5G, artificial intelligence (AI), quantum science, and other fields, passed the U.S. Senate in June and is currently under review in the House of Representatives.

This legislation was designed to foster industrial technologies in fierce competition with China, allocating $54 billion (approximately 64 trillion KRW) to the semiconductor sector.

Specifically, a budget of $39 billion (approximately 47 trillion KRW) was set for semiconductor industry investment incentives over five years starting in 2022, with up to $3 billion (approximately 3.6 trillion KRW) supported per investment project. Separately, a bill was introduced in the Senate in June to provide a tax credit of up to 25% for semiconductor facility and equipment investments.

Samsung Electronics announced on the 23rd (local time) that it has finally selected Taylor City, Texas, as the site for its new foundry semiconductor production line in the United States. Kim Ki-nam, Vice Chairman of Samsung Electronics (front row, right), Greg Abbott, Governor of Texas (center), and Senator John Cornyn are holding a press conference.
[Photo by Samsung Electronics]

Federal Subsidies and Indirect Tax Benefits
"Strengthening Support Measures to Expand Domestic Investment Is Urgent"

Samsung Electronics Vice Chairman Lee Jae-yong, who finalized semiconductor investment matters during a business trip to the U.S., held successive meetings with key White House aides and members of the federal Congress during his trip. It is reported that he requested cooperation for semiconductor investment incentives and the passage of semiconductor support legislation, urging active support from both the executive and legislative branches of the U.S. government.

Hwang Min-sung, an analyst at Samsung Securities, stated in a recent report, "According to the U.S. semiconductor project, the federal government will provide up to $3 billion in support, and city governments will offer about $1 billion in indirect incentives such as tax benefits (property tax rebates) and utilities like water and electricity, so Samsung Electronics is expected to receive a total of around $4 billion in incentives." This assumes Samsung Electronics' investment of 20 trillion KRW will be deployed by early 2026.

Samsung Electronics is also constructing a new semiconductor production line, Pyeongtaek Plant 3 (P3), in Pyeongtaek, Gyeonggi Province, aiming for completion in the second half of next year. Through the completion of P3, the company plans to increase domestic employment and strengthen collaboration with fabless (semiconductor design) companies and material, parts, and equipment firms. Industry insiders estimate the total investment in P3 will exceed 50 trillion KRW.

The industry is calling for expanded support measures such as tax benefits to increase domestic investment in strategic industries like semiconductors in South Korea. Last month, the "National Core Strategic Industry Special Act" was proposed with the intention of swiftly and strongly preparing support measures amid global technological hegemony competition and supply chain restructuring. However, there are criticisms that it does not sufficiently reflect industry voices. Initially, discussions started with the goal of a "Semiconductor Special Act," but the focus was diluted as the scope of industries to be supported expanded.

An industry insider said, "To attract production lines of global semiconductor companies to their own countries, not only the U.S. but also Europe, Japan, and China are competitively offering direct and indirect support," adding, "We also need to strengthen government-level support measures such as tax credits."

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