Exclusive: Samsung's $37B U.S. chip project to total 7M square feet by 2028

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Exclusive: Samsung's $37B U.S. chip project to total 7M square feet by 2028

Published: 02 Jun. 2025, 07:00 Updated: 02 Jun. 2025, 14:40

LEE JAE-LIM
[email protected]

Audio report: written by reporters, read by AI

Samsung Electronics' new semiconductor fabrication plant is under construction at Taylor, Texas, on February 14. [SAMSUNG ELECTRONICS]

The city of Taylor in Texas has curbed its financial incentives for Samsung Electronics' $37 billion semiconductor manufacturing project in new amendments as construction lags and a global chip glut dampens earlier optimism.

The shift also reflects a changing policy tone following the inauguration of Donald Trump, who has pushed for reduced subsidies for foreign chipmakers as part of a broader protectionist agenda.

Outside of the chip sector, the Trump administration is pressuring Samsung and Apple to shift production to the United States or face a 25-percent tariff by the end of June. The move poses a significant challenge for Samsung, which currently manufactures more than half of its smartphones in Vietnam.

In the revision, the U.S. city also requires Samsung to complete a total of 6 million square feet in buildings by 2026, with an additional 1 million square feet to be added by 2028 — bringing the total to 7 million square feet. The new designation, previously unlisted, appears intended to prevent further delays and adds pressure to the Korean chipmaker. The company is already staggering its domestic plant schedules and scaling back facility investments amid sluggish demand.

The amendments, announced on April 30, are the result of a monthlong effort by the city to reduce its expenditure on planning reviews and inspections tied to the chip plant. The incentive package — originally offering up to $25 million in rebates — has now been slashed to a maximum of $9 million, and even that is conditional upon Samsung meeting an equipment threshold by the end of 2026.

The city has labeled the threshold as “a guarantee Samsung will start to bring in equipment to begin manufacturing chips by the end of next year.”

Further signaling a pullback, Taylor is reclaiming tax revenues from non-core properties tied to the project. Starting in May, 90 percent of the tax revenue generated from Linde Gas, Samsung’s key gas supplier, will now be redirected to the city’s general fund instead of being reinvested into the project, underlining that the city is prioritizing its own budget over passing through benefits to Samsung.

The timeline for the Taylor plant has steadily slipped since construction began in 2022. Originally scheduled to become operational in the second half of 2024, the target was later revised to 2025, and then pushed back again to 2026 earlier this year.

Despite signs of lessened support, Samsung reaffirmed its dedication to the project, commenting that the company “remains fully committed” to commence operations by 2026, according to a Samsung Electronics spokesperson.

Whether the company can meet that timeline, however, remains uncertain. Internally, the company has already pushed back the completion of its massive chip complex in Pyeongtaek, Gyeonggi.

The construction of the new plants — dubbed P4 and P5 — have been on hold since last year due to a market downturn.

The broader chip industry is grappling with oversupply. While AI-fueled optimism triggered a wave of large-scale investment, demand has fallen short of expectations. Compounding the uncertainty are escalating U.S.-China trade tensions and export controls, which have disrupted supply chains and prompted strategic stockpiling.

“The plant will probably start operating next year, but an aggressive ramp-up of mass production is unlikely,” said iM Securities analyst Song Myung-seob. “Scaling up depends on two things — higher utilization rates at existing facilities and stronger order volumes from U.S.-based clients. Neither is guaranteed at this point.”

Samsung’s Taylor site represents its ambitious push into the North American market. The site is set to include two advanced semiconductor fabs for 4-nanometer and 2-nanometer chips, along with a research and development center. The company was awarded $4.7 billion in federal funding under the U.S. Chips Act — legislation at risk under the Trump administration due to tariff concerns and political resistance to industrial subsidies.

A general view of the Samsung's new semiconductor fabrication plant on April 16, 2024 in Taylor, Texas. [AFP/YONHAP]

Another analyst who requested anonymity said Samsung's potential delays have less to do with the current U.S. administration and more to do with broader market conditions and the company's ability to secure local clients.

"The Trump administration would likely welcome Samsung starting operations quickly, especially to boost the economy and support AI chip production," the analyst said. "But attracting a stronger customer base will take time, and running these fabs for just one or two clients could significantly hurt profitability."

Updated, June 2, 2025: An earlier version of this article incorrectly stated that the Taylor chip plant would include an advanced packaging facility. That reference has been removed, as the plant will not contain such a facility.

BY LEE JAE-LIM [[email protected]]