According to two sources, Samsung Electronics Co Ltd (005930.KSTaylor, )’s Texas chip facility would cost over $25 billion, up $8 billion from early estimates.
Because the information was private, the people stated inflation was the main driver of the price increase.
One source indicated the cost rise was 80% due to rising building costs. “Materials are more pricey,” the insider said.
Samsung did not immediately react.
The CHIPS Act, designed to boost U.S. chip manufacturing, attracted billions in incentives from the Biden administration. Yet rising prices raise doubts about how far those monies will go. Before a record inflation spike, the measure was suggested in 2020.
Early this month, U.S. Commerce Department officials warned most government funding would only pay 15% of new plant costs. In the three years since Congress initially proposed the $52 billion CHIPS Act award, of which only $39 billion is intended for direct investment in plant building, labor, and steel, prices have risen substantially.
It might raise already-expensive spending plans. For example, Taiwan Semiconductor Manufacturing Co (2330.TW), the world’s largest contract chip producer, tripled its projected investment in a new Arizona facility to $40 billion last year.
Intel Inc (INTC.O) unveiled a $20 billion semiconductor facility in Ohio that may expand to $100 billion. Last year, chipmaker Micron Technologies (MU.O) announced it will invest $100 billion over 20 years to create a computer chip production complex in upstate New York.
In 2021, Samsung unveiled its Taylor, Texas, factory. It offers 2,000 high-tech employment and powerful semiconductors for artificial intelligence, 5G, and mobile phones. Samsung has already pioneered.
One source told Reuters the corporation is pushing to construct the plant by 2024 to start manufacturing chips by 2025, ahead of a 2026 deadline to earn investment tax credits on factory gear.
The sources stated Samsung had invested half of the $17 billion initially estimated for the Taylor location and may develop more facilities.
