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Foundry business

Samsung remains tight-lipped on new US chip plant reports

By Jan 24, 2021 (Gmt+09:00)

Samsung remains tight-lipped on new US chip plant reports

Samsung Electronics Co. was reported to be considering investing over $10 billion to build a new chip plant in the US. But the world’s top memory chipmaker has neither confirmed nor denied the media reports, saying only: “We are considering it, but nothing has been determined.”

The equivocal response may suggest the South Korean tech giant is still weighing the pros and cons of expanding its foundry business in the US, industry watchers said on Jan. 24.

Samsung appears to be caught between the need to catch up with bigger contract manufacturer Taiwan Semiconductor Manufacturing Co. (TSMC) and concerns over whether now is the right time to invest heavily in the US, at a time when China, its largest single market, remains in a trade dispute with the country.

Samsung has recently clinched its first foundry order from Intel Corp. under which it will manufacture Intel-designed southbridge chipsets, installed on the motherboard of the computer and controlling all its input and output functions. But it was understood to have lost to TSMC, which won the long-awaited graphics processing unit (GPU) production deal.

Samsung will start producing Intel’s southbridge chipsets at its foundry plant in Austin, Texas from the second half of this year, for a monthly output of 15,000 wafers.

Bloomberg reported last week that Samsung is considering investing over $10 billion to build a new chipmaking plant in Austin, Texas, using the ultra-micro lithography technology of the 3-nanometer process. According to a report from the Wall Street Journal, Samsung may invest as much as $17 billion to build a semiconductor chip factory in Arizona, Texas or New York. Samsung’s proposed plant aims to be operational by October 2022, the report said.


TSMC’s aggressive investment plans to expand and upgrade its US production lines, alongside foundry business growth, should spur Samsung to follow suit.

In May of last year, TSMC, the world’s largest contract chip manufacturer, announced plans to open a 5-nanometer chip factory in Phoenix, Arizona, in a $12 billion project. The new factory will be TSMC’s first advanced manufacturing facility in the US. Once it begins operation as scheduled in 2024, TSMC is likely to take a bigger share of the US foundry market. 

TSMC manufactures chips for fabless companies and counts Apple Inc., Qualcomm Inc., Advanced Micro Devices Inc. (AMD) and Nvidia Corp. as its major customers. Recently, Intel announced a plan to outsource more of its chip production to foundry companies.

In comparison, Samsung’s foundry plant in Austin, Texas focuses on the 14 nm process since it began operation in 1998. Despite covering a wide range of products, the 14 nm process may not qualify for the production of state-of-the-art chips.

Timing wise, this might well be a good time for significant investment in the US – now, in President Joe Biden's first year in office. The US government is offering a range of incentives, including tax breaks and infrastructure upgrades, to lure factories into the country and to create jobs.

Samsung Electronics Vice Chairman Jay Y. Lee in a Pyeongtaek chip plant that adopted extreme ultraviolet lithography technology on Jan. 4. 
Samsung Electronics Vice Chairman Jay Y. Lee in a Pyeongtaek chip plant that adopted extreme ultraviolet lithography technology on Jan. 4. 


On the flip side, Samsung has good reason to tread cautiously. Market speculation is that Intel may continue to outsource only a small quantity of orders to Samsung. Although Intel is considering tapping foundry companies to make its cutting-edge central processing units (CPUs), its CEO Pat Gelsinger recently said that the US microprocessor manufacturer will produce most of the 2023 CPUs at its own fabs.

Further, Samsung kicked off the 10 trillion won ($9 billion) project last year to build a foundry production line using extreme ultraviolet (EUV) lithography technology in Pyeongtaek, South Korea. It also broke ground for a 30 trillion won, new chip plant in the same area in October of last year. Under such circumstances, new massive investment in the US could raise concerns about overinvestment.

It may take a lesson from the past as well. Back in December 2012, Samsung announced that it would spend $3.9 billion to expand its foundry production line in Austin. But then its major customer Apple switched to TSMC.

Additionally, Samsung runs state-of-the-art chip production lines in China. The neighboring country accounts for 26% of Samsung Electronics' sales as of the third quarter of 2020. Its huge investment in the US could take a toll on its relationship with China.

“Samsung is walking a tightrope between the US and China. In the absence of its de-facto leader, it's a tricky task,” said a senior business industry source.

Last week, Samsung's de-facto leader Jay Y. Lee was sentenced to two and a half years in prison on bribery and embezzlement charges.

Write to Jeong-Soo Hwang at

Yeonhee Kim edited this article.

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