The chip plant construction project of Samsung Electronics Co Ltd, the world’s largest memory chipmaker, will cost over $25 billion, which is over $8 billion more than the forecasted costs. The higher costs of the chip plant, which is being built in Taylor, Texas, are mainly a result of inflation, and because of more expensive materials.
According to the sources from the Reuters report, “The higher construction cost is about 80% of the cost increase,”, adding that “The materials have gotten more expensive.” Another source familiar with this industry added that “the newly estimated cost could go up even more if the construction of the Taylor plant gets delayed,” and that “The later the plant is completed, the higher cost we would be looking at.”
This chip plant was announced by Samsung back in 2021, with the main goal of producing advanced chips for mobile, Artificial Intelligence (AI), 5G, and high-performance computing. Moreover, the factory is expected to create 2,000 new jobs in this industry. The company aims to complete the project by 2024, while chip manufacturing will begin in 2025. Reuters’ sources also mentioned that around half of the initial cost forecast of $17 billion has been spent.
Chip manufacturers are applying for grants from the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act and Science Act from the U.S. President Joe Biden’s Administration. These incentives have the goal to increase U.S. competitiveness, innovation, research and development (R&D), and national security and strengthen the semiconductor manufacturing and supply chains.
According to officials from the U.S. Commerce Department, government grants can cover up to 15% of the expenses for new plants. Other companies, such as the largest contract chip producer, Taiwan Semiconductor Manufacturing Company Limited (TSMC), announced tripling the investment to $40 billion into a new plant in Arizona. Moreover, Intel Corporation announced that the $20 billion Ohio chip plant factory, could be expanded to a $100 billion investment, while the semiconductor manufacturing company Micron Technology announced computer chip factory investment plans for up to $100 billion in New York.