According to insiders familiar with the matter, Samsung Electronics Co Ltd’s chip plant being built in Taylor, Texas, is expected to cost the company over US$25 billion, which is more than US$8 billion above initial projections. The increase in cost is primarily due to inflation, with construction expenses accounting for approximately 80 per cent of the cost increase. The cost of materials has also increased significantly.
The insiders, who declined to be identified, stated that the estimated cost could rise even further if the construction of the plant is delayed. Although Samsung has not commented on the matter, the increasing costs raise questions about how far the billions in grants being applied for by chip manufacturers from the Biden administration under the Chips Act will go.
According to the US Commerce Department, most government grants will only cover up to 15 per cent of the cost of new plants, and since the proposed Chips Act grants were introduced three years ago, the cost of labour and construction materials has risen sharply. As a result, chip makers’ significant spending plans could be pushed even higher.
Samsung, the world’s second-largest contract chip manufacturer, plans to create 2,000 high-tech jobs at the Taylor plant, which is expected to produce advanced chips for various functions such as artificial intelligence, 5G, and mobile phones. The company is rushing to complete construction by 2024, ahead of a 2026 deadline to secure investment tax credits on tools for the factory.
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(Via)
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