The world's largest memory chip and smartphone maker is in
discussions to locate a facility in Austin, Texas, capable of fabricating chips
as advanced as 3 nanometres in the future, people familiar with the matter
said. Plans are preliminary and subject to change but for now the aim is to
kick off construction this year, install major equipment from 2022, then begin
operations as early as 2023, they said. While the investment amount could
fluctuate, Samsung's plans would mean upwards of $10 billion to bankroll the
project, one of the people said.
Samsung is taking advantage of a concerted US government
effort to counter China's rising economic prowess and lure back home some of
the advanced manufacturing that over the past decades has gravitated toward
Asia. The hope is that such production bases in the US will galvanise local
businesses and support American industry and chip design. Intel troubles
ramping up on technology and its potential reliance in the future on TSMC and
Samsung for at least some of its chipmaking only underscored the extent to
which Asian giants have forged ahead in recent years.
The envisioned plant will be its first in the US to use
extreme ultraviolet lithography, the standard for next-generation silicon, the
people said, asking not to be identified talking about internal deliberations.
Asked about plans for a US facility, Samsung said in an email no decision has
yet been made.
“If Samsung really wants to realize its goal to become the
top chipmaker by 2030, it needs massive investment in the US to catch up with
TSMC,” said Greg Roh, senior vice president at HMC Securities. “TSMC is likely
to keep making progress in process nodes to 3nm at its Arizona plant and
Samsung may do the same. One challenging task is to secure EUV equipment now,
when Hynix and Micron are also seeking to purchase the machines.”
If Samsung goes ahead, it would effectively go head-to-head
on American soil with TSMC, which is on track to build its own $12 billion chip
plant in Arizona by 2024. Samsung is trying to catch TSMC in the so-called
foundry business of making chips for the world's corporations -- a particularly
pivotal capability given a deepening shortage of semiconductors in recent
weeks.
Under Samsung family scion Jay Y. Lee, the company has said
it wants to be the biggest player in the $400 billion chip industry. It plans
to invest $116 billion into its foundry and chip design businesses over the
next decade, aiming to catch TSMC by offering chips made using 3-nanometre
technology in 2022.
It already dominates the market for memory chips and is
trying to increase its presence in the more profitable market for logic
devices, such as the processors that run smartphones and computers. It already
counts Qualcomm and Nvidia as customers, companies that historically relied on
TSMC exclusively. It has two EUV plants, one near its main chip site in
Hwaseong, south of Seoul, and another coming online nearby at Pyeongtaek.
To close a deal, Samsung may need time to negotiate
potential incentives with President Joe Biden's administration. The company has
hired people in Washington DC to lobby on behalf of the deal and is ready to go
ahead with the new administration in place, the people said. Tax benefits and
subsidies will ease Samsung's financial burden, but the company may go ahead
even without major incentives, one of the people said.
Samsung has been looking into overseas chipmaking for years.
Intensifying trade tensions between the US and China and now COVID-19 are
stoking uncertainty over the reliability and economics of the global supply
chain. Plants in the US could help the Korean chipmaker strike better deals
with key clients in the US, particularly in competition with TSMC.
From Microsoft to Amazon and Google, the world's largest
cloud computing firms are increasingly designing their own silicon, aiming to
tailor chips to power their vast datacentres more efficiently. All need
manufacturers like TSMC or Samsung to turn their blueprints into reality.
Samsung's US branch purchased land in October right next to
its existing Austin fab, which is capable of running older processes. The
Austin City Council held a meeting in December to discuss Samsung's request to
rezone that parcel of land for industrial development, according to meeting
minutes.
Some analysts question Samsung's ability to carve out a
significant share of a market dominated by TSMC, which is spending a record $28
billion this year to ensure it remains at the forefront of both technology and
sheer capacity.
For its part, Samsung's semiconductor division spent $26
billion on capital expenditure in 2020, but that's been largely in support of
its dominant memory business and not all of its expertise in making memory is
directly relevant to creating advanced logic chips.
Processors are more complex to manufacture than memory and
their production yields are harder to control and scale up in the same way.
Foundry customers also require bespoke solutions, imposing another barrier to
rapid expansion and also making Samsung dependent on customers' designs.
But the Korean giant can draw confidence from its work with
Nvidia, whose chief executive officer has sung Samsung's praises in
collaborating on the manufacturing for its latest graphics card silicon.
© Bloomberg LP