Why Is Samsung Building a Semiconductor Factory in Texas? 

Samsung announced it will assemble a $17bn semiconductor factory in Texas, during the global shortage of chips used in phones, cars, and other electronic devices.

The factory will be the South Korean company’s biggest North American asset and is expected to commence operation in the second half of 2024. 

Real Reasons? 

There are commercial reasons, there are political reasons and there may be other reasons based on projections by analysts of a shift in global economic power. 

Firstly, shutdowns during Covid-19 triggered supply problems, followed by repurposing the chips themselves for domestic appliances and electronics, badly affecting the automotive industry.  

Then, of course, there’s the perennial Taiwan issue, which now produces the vast majority of semiconductors in the world. With the continued jitters over China’s sovereignty claims, lobbyists in Washington DC would have been queueing up to advise on local mass production. Nina Turner, a research analyst at the research firm IDC, noted that it was “a concentration risk, a geopolitical risk” to be so dependent on Taiwan for considerably large amounts of the world’s chip production. 

Thirdly, the blockade of raw materials out of Ukraine. The war may be temporary but the implications of a hostile nation controlling the supply of neon and palladium – two vital components in the manufacture of semiconductors – is permanent. The investment by Samsung in their factory will generate more funds to find alternate raw materials from a stable source. 

Lastly, and linking back to the Taiwan sovereignty issue, is something that now seems inevitable. The establishment of the Yuan is the new global currency, replacing the dollar. This new factory will attempt to slow this transformation down. 

Final Thoughts 

President Joe Biden emphasized, in February, that domestic semiconductor manufacturing is a priority for his government, stressing that his administration is planning to improve constant chip shortages and address legislator problems that outsourcing chipmaking had made the U.S. weaker to supply chain disturbances. 

Other countries have taken similar measures to manufacture semiconductors closer to consumption. Earlier this November, the European Commission stated it would support the financing for their production in the 27-nation bloc. 

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