Samsung delays completion of chip factory in US due to lack of customers: Report

ISTANBUL

Samsung is postponing the completion of a semiconductor facility in the US state of Texas as the company is having trouble finding buyers for the plant's production, Nikkei Asia reported Thursday.

After receiving a grant of up to $4.7 billion from the Biden administration in December under the CHIPS and Science Act, which sought to promote US technological supremacy, the South Korean tech firm has stated that it will spend more than $37 billion in Texas over the next few years.

Originally planned to begin production in 2024, the investment comprises a facility in Taylor, Texas, that will be used to produce advanced semiconductors. That date has been rescheduled for 2026.

"The process (of completing the Taylor plant) is delayed because there are no customers. (Samsung) is not in a situation where it can do something, even if it brings equipment in at the moment," a source told Nikkei.

A chip supply chain executive with knowledge of the situation said Samsung, which currently produces chips in Austin, Texas, is not in a rush to set up chipmaking machinery in the new facility.

"Local demand for chips isn't particularly strong, and the process nodes Samsung planned several years ago no longer meet with current customer needs," the executive said. "However, overhauling the plant would be a major and costly undertaking, so the company is adopting a wait-and-see approach for now."

Samsung is having difficulty catching up to a competitor, Taiwan Semiconductor Manufacturing Co. (TSMC), which is why the delay occurred. According to Trendforce statistics, TSMC leads the contract chipmaking business with a 67.6% worldwide market share by revenue in the first quarter, followed by Samsung at 7.7%.

Also, the global economic challenges are the backdrop for Samsung's halt in Texas. The need for advanced processors for AI applications is still rising, but there are currently no indications that the demand for chips used in computers, cellphones, consumer electronics and automobiles is much improving.

A recovery in the global semiconductor industry is being further hampered by China's efforts to localize chip production in reaction to tensions with the US.