Following the unveiling of a $17 billion new chip plant in the United States last week, Samsung Group is hoping to further extend its influence in the semiconductor industry. Samsung’s Samsung Foundry subsidiary makes semiconductors, and according to Korean news sources, the corporation is trying to purchase chip manufacturers that get their goods from Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker. Furthermore, the corporation is estimated to have obtained up to $4 billion in subsidies for its new chip facility in Taylor, Texas.
The news regarding Samsung’s interest in acquiring semiconductor manufacturers comes from Business Korea, which speculates that after the $17 billion investment in Texas, Samsung has around $34 billion available to explore acquisitions. The company’s multi-year, multi-sector investment strategy, which we’ve previously discussed, includes a look at numerous new sectors. Next-generation telecommunications, artificial intelligence, biotechnology, and semiconductors are examples.
On the semiconductor front, Business Korea believes that Samsung has several targets in mind. These, according to the publication, are:
In the semiconductor field, automotive semiconductor makers are expected to be Samsung’s M&A targets. They include NXP Semiconductor, an automotive semiconductor company of the Netherlands, the microcontroller business unit of Texas Instruments in the United States, Renaissance Electronics of Japan, Infineon Technologies of Germany, and ST Microelectronics of Switzerland.
All of the firms identified are essential stakeholders in the semiconductor supply chain, and, more importantly, they are all customers of TSMC, Samsung’s sole competitor in the contract semiconductor production sector. Next year, as both race to bring the 3-nanometer (nm) chip manufacturing node to market, competition between the two will heat up.
Surprisingly, although Business Korea speculates that Samsung has a $34 billion budget for mergers and acquisitions (M&A), Mashdigi, as reported by the United Daily News (UDN), believes that the sum might be as high as $100 billion. UDN speculates that if Samsung is successful with the transactions, it may effectively redirect or place additional orders to its own semiconductor production business.
Furthermore, according to Business Korea, Samsung has obtained up to $4 billion in subsidies for the Texas project. These include exemptions from property, education, and job creation taxes.
According to Business Korea:
For example, the city government decided on Nov. 9 to apply a factory site-related property tax cut of 92.5 percent, 90 percent, and 85 percent for the first to third decades, respectively. In addition, an education tax of US$314 million will be exempted by the Taylor Independent School District.
Job creation subsidies from the state government total US$27 million and it will provide tax incentives about building material purchase and so on. On the federal government level, the House is deliberating on the U.S. Innovation and Competition Act [USICA] to provide US$250 billion in the semiconductor industry and up to US$3 billion may be provided for Samsung Electronics from 2022 to 2026. In the Senate, a bill for a tax credit of up to 25 percent was tabled in June this year regarding semiconductor facility and equipment investment.
The USICA amendment to the CHIPS Act was introduced in May of this year, and it offers to give $39 billion to advanced semiconductor manufacturing in the United States. Individual projects, such as Samsung’s Texas facility, are eligible for up to $3 billion in support, and it seems probable that Business Korea is referring to this sum.
The Senate passed the amendment and accompanying bill in June of this year, and if it becomes public law, the $39 billion will be allocated across five fiscal years beginning with the current fiscal year.
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