[why&next] Samsung’s “260 Trillion Won Texas Investment Plan” Revisited... The Dilemma of U.S. Investment Scenarios

260 Trillion Won Investment Plan Submitted in 2022
"Samsung Likely Has U.S. Investment Plans"
High U.S. Investment Costs, Yongin Cluster as a Variable
Industry: "Government Must Consider Incentives and More"

As the Donald Trump administration in the United States once again brings up the semiconductor tariff issue, Samsung Electronics’ “260 trillion won investment blueprint” submitted to the state of Texas is being revisited. This is because the company’s substantial investment capacity and willingness to expand in the United States remain documented in official records. However, with the launch of the massive domestic semiconductor cluster project in Yongin and the considerable cost burden of expanding its U.S. plant, the dilemma surrounding Samsung’s investment direction is also growing.

According to industry sources on January 20, Samsung Electronics applied for the “Chapter 313” tax incentive program in Texas in May 2022, presenting a mid- to long-term investment plan to build 11 new semiconductor production plants in Austin and Taylor over the next 20 years, thereby creating 10,000 jobs. The documents submitted by Samsung Electronics indicate that the company planned to build 98 new plants in Taylor and two in Austin, investing a total of 192.1 billion dollars (about 260 trillion won) in Texas. Considering that the ongoing investment in the Taylor plant is currently valued at 37 billion dollars, this officially leaves room for even greater expansion.

At the time, the company dismissed the plans, stating, “There is no concrete investment plan,” but this suggests that Samsung Electronics did possess the investment capacity and a mid- to long-term intention to invest. Kyung Hee-kwon, a research fellow at the Korea Institute for Industrial Economics and Trade, explained, “A company like Samsung Electronics likely already has long-term investment plans internally. Therefore, even if additional investments are made in the United States, it would not come as a major shock.”

The problem is that investing locally in the United States is far from inexpensive. Memory production facilities require not only high initial construction costs but also enormous expenses and time for equipment installation and workforce management. In particular, some analyses suggest that the cost structure in the United States is fundamentally less favorable than in Korea. According to a report published the previous day by Japanese investment bank Nomura Securities, the investment cost per unit of facility capacity for U.S. memory plants is expected to be 20-30% higher than in Korea, and the time to complete construction is also expected to be 20-30% longer. Furthermore, given that local production costs in the United States are relatively higher, it is estimated that the production cost for memory plants in the U.S. will be at least 40% higher than in Korea.

Nomura Securities analyzed, “The combined investment costs for Samsung Electronics and SK Hynix in the United States are estimated to reach between 100 trillion and 120 trillion won from 2027 to 2030. If Korea’s 200 billion dollar U.S. investment fund is utilized, it could help alleviate both the government’s investment risk and the burden on memory companies.”

In addition, the fact that massive investments are being pursued simultaneously in Korea since 2023 is making the decision even more difficult for companies. Samsung Electronics, SK Hynix, and other domestic memory companies officially launched the “Yongin Semiconductor Cluster Project” in 2023, aiming to create an advanced semiconductor production complex in Korea worth 300 trillion won. With large-scale facility investments being made both domestically and abroad, how to allocate limited investment resources has become a key issue. Some even suggest that if local investments in the United States are further increased, domestic investment plans may be partially scaled back.

Amid this situation, as the possibility of additional U.S. plant expansions or even relocating production bases outside the Yongin industrial complex is being discussed, there is a growing sense of burden within the industry. An industry insider said, “Even if the Korean government offers various incentives to maintain domestic memory investments, if political burdens such as relocating industrial complexes are added, companies will inevitably face greater concerns. With memory companies standing at a crossroads between U.S. and domestic investments, it is time for the government to reconsider which incentives would be most reasonable.”