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The US awards Samsung $6.4 billion in subsidies to boost chip production in Texas

By Leah Douglas and Alexandra Alper

(Reuters) -The Biden administration will award up to $6.4 billion in subsidies to South Korea’s Samsung to expand its chip production in central Texas as part of a broader effort to boost U.S. chip production, the Department of State said Trade Monday.

The 2022 Chips and Science Act funding will support two chip manufacturing facilities, a research center and a packaging facility in Taylor, Texas, the agency said, as previously reported by Reuters.

It will also allow Samsung to expand its semiconductor plant, Commerce Department Secretary, in Austin, Texas Gina Raimondo added, while boosting chip production for the aerospace, defense and automotive industries and strengthening national security, administration officials told reporters.

“These investments will enable the U.S. to once again lead the world, not only in semiconductor design, where we now lead, but also in manufacturing, advanced packaging and research and development,” Raimondo said.

The announcement, which made Samsung the third-largest recipient of the Chips Act award, as first reported by Reuters, is the latest move by the Biden administration to build out the chip industry in the United States.

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The goal is to reduce dependence on China and Taiwan as the U.S. share of global semiconductor manufacturing capacity has fallen from 37% in 1990 to 12% in 2020, according to the Semiconductor Industry Association (SIA).

Lawmakers have warned that US dependence on chips produced in Taiwan by TSMC, the world’s largest contract chip manufacturer, is risky because China claims the self-governing island as its territory and has reserved the right to use force to retake it .

“By investing in advanced semiconductor manufacturing, we will help secure this vulnerable supply chain, strengthen our national security and global competitiveness, and create new jobs for Texans,” said John Cornyn, a Republican senator from Texas who co-sponsored the original legislation.

Samsung is expected to invest about $45 billion to build and expand its facilities in Texas by the end of this decade, senior administration officials said.

“We applaud Samsung for boldly investing in U.S. manufacturing and salute the U.S. Department of Commerce for making significant progress in implementing the CHIPS Act’s manufacturing incentives and R&D programs,” SIA said in a statement.

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Intel won $8.5 billion in subsidies last month, while Taiwan’s TSMC secured $6.6 billion in April to expand its U.S. production.

(Reporting by Leah Douglas; Editing by Aurora Ellis and Jonathan Oatis)

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