The cost of Samsung’s Texas Semiconductor chip plant raises above $25 billion

The South Korean tech company is busy with the construction of its new semiconductor plant in Texas. According to a recent report, the plant will cost around $25 billion. In May 2022, the company unveiled its plan for a semiconductor plant in Texas. Later, the firm said that it will expand the plant by an added 176.76 acres of land. As of now, the new estimated cost is eight times more in contrast to the previously estimated $17 billion. The recent information is based on industry sources. One of the major reasons behind such high costs is high inflation.

Back in December 2022, the company begin material and equipment acquisition for the new plant. In January 2023, the company updated that the progress is on track and the plant will be functional in the due timeframe. Some sources even claim that the prices could go beyond the expected estimates if the project gets delayed. There is no official word from Samsung regarding this news as yet.

In addition to this, Chipmakers are submitting applications for grants worth billions of dollars under the US President Joe Biden’s administration’s Providing Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, which aims to increase chip production in the nation.

Yet, the rising expenses make it uncertain how much run rate those grants will offer. Before the US saw its unprecedented run in inflation, the bill was reportedly presented in 2020. US Department representatives stated earlier this month that the majority of grants will only pay up to 15% of the price of new facilities.

Just $39 billion of the initial $52 billion Semiconductor award has been put out for actual investment in plant building. The cost for the companies building the facilities will increase further as a result of the rise in labor and building material prices.