Samsung’s new chip plant in Texas incurs significant cost overruns

A few months ago, the South Korean tech firm Samsung announced that they are establishing a new chip plant in Taylor, Texas, USA. In this chip plant, Samsung in intending to manufacture chips for 5G, high-performance computing (HPC), and artificial intelligence (AI). Recently it has been reported that this new chip plant will cost more than $25 billion USD to the South Korean firm, so let’s take a look at the full report. 

For information, this new chip plant will be completely in operation by the year 2024, as per the expectations, and currently, its establishment process is running. As per the sources, the Korean manufacturer should spend more than $25 billion USD on this new Texas chip plant, of which the initial forecasts will cost up to more than $8 billion USD. It is possible that the cost has been increased because of rising inflation. 

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The source stated in that manner, “The higher construction cost is about 80% of the cost increase,” one of the sources said. “The materials have gotten more expensive.” Besides it, another source has assumed that “The newly estimated cost could go up even more if the construction of the Taylor plant gets delayed.” He also added, “The later the plant is completed, the higher cost we would be looking at.” 

Govt. will provide only 15% of the total costs

Informatively, the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act from US President Joe Biden’s administration provide billion dollars grants to chipmakers, but the rising costs made it unclear how much run rate those grants as able to provide. As per the US Commerce Department officials, the US Government will grant only 15% of the new plant’s cost, which is not sufficient at all. 

Let us inform you, Out of the $52 billion USD that were initially released for CHIPS grants, only $39 billion USD are decided to be set aside for the plant construction’s direct investment. As the labor cost and construction material prices increase, they will end up winding up chipmaker’s plant-establishment costs. 

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Thanks to “Reuters”

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