South Korean electronics company Samsung has confirmed that the cost of building it new factory in Texas in the US has risen by $8bn due to inflation.
The facility, which is being developed in the city of Taylor, around 50km north-east of Austin, will now cost $25bn rather than the original estimate of $17bn. The factory will manufacture advanced logic semiconductors, which are used in various electronic products including cars, phones and computers.
Samsung has said that it was aiming for construction of the factory to be completed and operations to begin at the 485-hectare site in the second half of 2024.
In August 2022, the US government signed into law the CHIPS and Science Act, which aims to boost its domestic semiconductor industry through funding for companies manufacturing in the US. The act also aims to weaken China’s domestic production capabilities by barring any recipients of the funding from investing in advanced technology facilities in China for ten years.
While China and the US are the largest buyers of semiconductors globally, they rank just fourth and fifth, respectively, for chip manufacturing. Both are targeting an increase in inward investment to prevent the supply chain issues experienced during the Covid-19 pandemic.
Other major chip manufacturing countries have responded to protectionist measures taken by the superpowers by looking to protect their own domestic industries. In March 2023, Samsung announced plans for five new semiconductor facilities in South Korea, with a total investment of $230bn (Won299.45bn).
According to GlobalData, foreign direct investment in the semiconductor sector rose from 239 greenfield projects worldwide in 2021 to 282 projects in 2022.