According to the latest reports, Samsung's semiconductor chip plant, which is currently under construction in Taylor, Texas, will cost the company over $25 billion. This amount is $8 billion more than what was initially forecasted, i.e., $17 billion. This information comes from industry sources, and the primary reason for this increased cost is ‘inflation'.
Back in May 2022, Samsung Foundry announced that it would be building a new semiconductor plant in Talyor, Texas, USA, with a total investment of a staggering $17 billion. Later, the company announced that it would add more land and expand its investment zone by an additional 176.76 acres in this new semiconductor plant.
In December 2022, Samsung Foundry started procuring equipment for this chip plant in Texas. In January 2023, Samsung's CEO, Kyung Kye-hyun, confirmed that the construction of the semiconductor plant is right on track and will complete as scheduled. However, now, as per Reuters, the chip plant will cost the South Korean technology giant $8 billion extra since the materials have become expensive.
The grants won't be sufficient if the construction of the chip plant gets delayed
Another source also added that the new estimated cost could go even higher if the construction of the semiconductor plant in Texas gets delayed. Samsung hasn't commented on this rise in cost as of yet. Chipmakers are applying for billions of dollars in grants through the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act from US President Joe Biden’s administration, which aims at ramping up chip production in the country.
But, the increased costs raise questions about how much run rate those grants will provide. The bill was apparently proposed in 2020, before the historic run in inflation in the US. Earlier this month, US Department officials said that most grants would cover only up to 15% of the cost of new plants.
Off the first floated amount of $52 billion for the Chips grant, only $39 billion has been set aside for direct investment in plant construction. The rise in the price of construction materials and labor costs will further push up the cost for the companies setting up the plants.
