[EXCLUSIVE] Samsung struggles to secure U.S. CHIPS Act funding

A Samsung Electronics plant is under construction in Taylor, Texas. [SCREEN CAPTURE]

Samsung Electronics is struggling to secure tax breaks from the U.S. government for its upcoming Texas plant.

The Korean chipmaker is competing with rival chip producers like Intel and Micron Technology over subsidies for its new facility, which is currently under construction in Taylor, Texas. Mass production, previously slated to begin in 2024, has been pushed back to 2025.

Multiple sources with knowledge of the matter said that negotiations with the state and federal governments over the pace and amount of the funding are still under way.

“The cost of building the plant keeps on rising,” said one source, who spoke on condition of anonymity due to the sensitivity of the issue. “Before the decision was made, the U.S. government assured Samsung of big financial support. But as the actual negotiation goes, the tax benefit was disappointing for Samsung.”

Samsung Electronics declined to comment on the negotiation process.

One possible cause of the prolonged talks could be the high number of competitors vying for the governmental funding, which is capped at $53 billion under the Chips and Science Act.

“Over 400 chipmakers have been expressing interest in the subsidy grant, including major companies like TSMC, Intel and Micron,” the source said.

All three of those companies have filed or are filing applications to build multi-billion dollar chip manufacturing facilities in the United States.

Intel plans to invest at least $20 billion in two new factories in Columbus, Ohio. The California-based chip giant also manufactures microchips for the U.S. military and other governmental intelligence applications, which has paved the way for a grant expected to be worth billions of dollars, according to the Wall Street Journal.

Micron Technology will spend $20 billion building a new manufacturing site near Syracuse, New York.

Taiwan’s TSMC pledged $40 billion to establish two new production facilities in Phoenix, but the Arizona project has been delayed due primarily to a shortage of skilled workers.

A small batch of wafers will enter the factory in the second half of 2024, with mass production beginning in 2025, Samsung Electronics President Choi Si-young announced at the International Electron Devices Meeting, which was held in San Francisco, California, earlier this month.

Samsung's U.S. subsidiary hosted a reception for U.S. lawmakers last month. Local media outlets reported that the event aimed to discuss the difficulty of obtaining the government's subsidy, although the speakers only highlighted Samsung's long-standing $47 billion investment in the United States and history of cooperation with the country.

Republican Senator Mark Kelly and Democrat Rep. Raja Krishnamoorthi were present at the event.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]