As the 2nd-largest foundry firm in the world, Samsung Electronics Co. is aiming to expand its chipmaking operations with a $17 billion investment in the United States. Semiconductors, pure, conductive material that acts as a medium between a conductor and insulator, are an essential component of any electronic device. The South Korean company is one of the world’s largest chip makers and is seeking to commit more resources to their network of foundries to compete with rivals amidst a global semiconductor shortage.
Austin, Texas, is the most likely investment destination given the presence of an existing Samsung chip facility there. An expansion of Samsung’s operations in the city would directly create over 1,800 jobs while indirectly producing 1,173 positions, with salaries generating as much as $7.3 billion over the next 20 years. While the company is reportedly still in negotiations with the local government over tax breaks and other inducements, Texas Governor Greg Abbott has signaled his support for the project, citing the potential deal as another example of “explosive economic growth” on the horizon for his state. Overall, South Korea has invested at least $15.9 billion in Texas since 2003, supporting over 10,000 domestic jobs. The semiconductor industry is essential for the local economy, as semiconductor products account for $2 billion in Texan exports to South Korea.
However, it is possible Samsung might invest elsewhere in the country, with potential locations in Arizona and New York. Arizona has become a semiconductor hotspot with Samsung rival TMSC’s announcement that it would construct a new $12 billion chip factory in the state. Offering numerous tax incentives for investing companies, New York is also a potential candidate for a chip facility. The state competition to attract semiconductor investments signals the importance of industry expansion for the growth of local economies and communities.
The Biden administration has strongly advocated for opportunities to strengthen US semiconductor manufacturing. President Biden's signature American Jobs Plan asks Congress to allocate $50 billion to semiconductor research and manufacturing. In April, the White House convened a virtual meeting of senior officials and executives from 20 major companies to address the global shortage of chips and semiconductors. Samsung was the only South Korean firm present. The Biden administration’s push for semiconductor investments coincided with South Korean President Moon Jae-In's first official visit to the United States in May. The Biden-Moon summit produced many commitments, including a COVID-19 vaccine agreement to inoculate South Korean forces.
Other South Korean companies announced numerous economic initiatives before and during the summit. For example, Hyundai recently announced its commitment to invest over $7.4 billion in the United States by 2025. SK Hynix will establish a research and development (R&D) center in Silicon Valley, investing around $1 billion, while Ford and SK Innovation will create a joint venture to manufacture battery cells in the United States. These economic initiatives, including the pending Samsung project, indicate the increased cooperation and collaboration between South Korean and American companies. To celebrate US-South Korea economic collaboration at the local level, President Moon also stopped in Georgia towards the end of his trip to visit a South Korean electric battery plant, accompanied by Georgia Governor Brian Kemp and Senators Raphael Warnock and Jon Ossoff.
Although Samsung has not yet decided on the location of its foundry expansion, increased US-South Korea economic cooperation signals that local communities across the country will greatly benefit from South Korean industry expansion and economic collaboration.
Isabel Ayala is a participant in the Young Professionals Program at the East-West Center in Washington. She is a senior at the University of Texas at Austin concentrating in Asian Studies and Government.