Samsung Electronics under pressure from the US White House. Is there a choice?

Samsung Electronics under pressure from the US White House. Is there a choice

SEOUL: As the US White House announced its will to cope with the semiconductor shortage and attract investments at semiconductor videoconference held on April 12 (local time), it is expected to have a significant impact on the domestic semiconductor industry.

Although the details of the meeting were not disclosed in detail, industry analysis is that Samsung Electronics, the only Korean company to attend the meeting, is forced to respond to the demands of the United States right away.
Samsung Electronics attended the White House video conference that day represented by the business manager Si-young Choi (President). But the company not give special comments on what order they received and how they will be responded.

Experts anticipate that the meeting was triggered by the disruption of production of US automakers such as GM and Ford due to a shortage of semiconductor supplies. And thus, the plan is to expand production of semiconductors for vehicles that currently experience shortage.

Prospects are that this will act as a “unspoken pressure” for not only automotive semiconductor companies such as NXP in the Netherlands that attended the White House meeting, but also foundries (consigned semiconductor manufacturing) such as TSMC in Taiwan, Samsung Electronics and other global foundries to cope with the shortage of automotive semiconductors in the United States.

Pat Gelsinger, CEO of Intel, an American integrated device manufacturer (IDM), who attended the meeting, immediately responded to the White House’s request and told Reuters, “We are discussing with design companies to produce automotive semiconductors within the Intel factory network, and the goal is to produce them within six to nine months.”.

This is expected that the expansion of automotive semiconductor production will be led by foundry companies such as TSMC. For Samsung Electronics, that rarely produces automotive semiconductors, it is going to be to be a burden.

Samsung Electronics and SK Hynix are the world’s strongest players in the memory field, but they rarely produce automotive semiconductors. This is because automotive semiconductors are less profitable than high-performance memories produced through ultra-fine processes, which are mainly used by domestic companies. In particular, unlike memory semiconductors, mainly installed in IT devices with short product replacement cycles such as smartphones, PCs, and cloud servers, semiconductors are mounted on cars that run for up to ten years, so the product cycle and warranty period are long, and domestic companies are reluctant to produce them.

However, according to the atmosphere of the White House on this day, Samsung Electronics, that also has foundry capabilities, is now under pressure to participate in the production and supply of semiconductors for vehicles.

An official in the semiconductor industry said, “Samsung may give up its profitability and set up a semiconductor line for automobiles in the Austin plant in the US.” As the US strengthened its domestic-oriented semiconductor supply chain system and actively started creating jobs, global companies are expected to reduce their investment in US semiconductor production facilities.

President Biden said during the videoconference, “The reason I am here today is to tell you how we will strengthen the semiconductor industry in the United States and ensure the supply chain in the United States. Our competitiveness depends on how companies invest.” In fact, it was an order for aggressive investment in the United States.

Experts believe that the US, which is competing for semiconductor supremacy with China, is expected to intensify demands for global companies including Samsung Electronics to keep China in check.

In response to the new government policy, Intel has already announced that it will build two new fabs (factories) in Arizona, US with 20 billion dollars, to enter the foundry market.

TSMC, Samsung’s foundry rival, announced that it will invest USD 12 billion in Arizona to build a foundry plant and then invest another USD 100 billion in the United States throughout three years to cooperate with the semiconductor supply shortage.

Accordingly, experts observe that Samsung Electronics, which has numerous clients in the US, will sooner or later finalize an additional investment plan in the US to respond to US demands.

Samsung Electronics is currently investing USD 17 billion (about 20 trillion won) in the US to build an additional semiconductor factory and is negotiating a new incentive plan with a leading candidate, Texas (Austin). This is because business risks have increased since Samsung Electronics’ Austin plant was shut down due to a cold wave last winter.

An official in the business community said, “Samsung Electronics’ large-scale investment plans and decision-making are currently delayed due to the absence of Vice Chairman Lee Jae-yong, but it is in a situation that the decision cannot be postponed as well as investment in the United States.” “I think they will soon reveal the plan considering the invitation from the White House,” he added.

Another official predicted, “If the Biden government provides various incentives to attract investment in the US facilities, this could be an opportunity for Samsung as well.” (ANI/Global Economic)[row][third_paragraph] Left Side Content [/third_paragraph][third_paragraph] Middle Content [/third_paragraph][third_paragraph] Right Side Content [/third_paragraph][/row] 

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