Samsung’s new semiconductor fab in Texas sees soaring costs, potentially requiring an additional $8 billion investment

In May last year, Samsung announced plans to construct a new semiconductor fabrication plant in Taylor, Texas, with an investment of $17 billion. The project has been progressing according to schedule, with Samsung beginning equipment procurement for the facility in December. However, as the project advances, escalating material costs seem to be inflating the required funding.

According to Sammobile, Samsung may need to increase its investment in the new Taylor, Texas, fab by an additional $8 billion, pushing the total project cost to $25 billion. Industry insiders suggest that the primary reason for the increased expenses stems from inflation. If funding is not secured in a timely manner, construction of the plant could be delayed.

Many companies currently constructing fabs in the United States are taking advantage of the CHIPS Act to apply for subsidies, hoping that increased costs can be offset by grants. However, the act was established in 2020, at a time when inflation was not as significant. Recently, officials from the relevant departments indicated that most grants would only cover 15% of the costs for new factories. Out of the initial $52 billion in subsidies allocated by the CHIPS Act, only $39 billion will be utilized for actual construction, with rising building material and labor costs due to inflation further elevating the expenses.

Intel, who announced an investment of over $20 billion last year to build two new fabs in Ohio, faces similar challenges during construction. It is estimated that Intel will ultimately need to spend over $5 billion more than initially projected, representing a substantial increase in costs.