Samsung’s new Texas chip plant will cost US$25 billion, US$8 billion more than expected because of inflation

Higher construction costs are 80 per cent of the cost increase for the semiconductor plant Samsung is building in Taylor, Texas, sources told Reuters

Chip makers are applying for billions in grants from the US Chips Act, but increasing costs raise questions about how far those dollars will go

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Samsung Electronics’ chip production plant at Pyeongtaek, South Korea. Photo: Reuters

Published: 11:15am, 16 Mar 2023Updated: 2:25pm, 17 Mar 2023

A chip plant that South Korea’s Samsung Electronics is building in Taylor, Texas, will cost the world’s biggest memory chip maker more than US$25 billion, up more than US$8 billion from initial forecasts, according to three people familiar with the matter.

The increase in cost is primarily because of inflation, the people said, declining to be named because the information was not public. The higher construction cost is about 80 per cent of the cost increase, one of the sources said. The materials have also gotten more expensive, the source added.

A second source said the newly estimated cost "could go up even more" if the construction of the Taylor plant gets delayed, adding that the estimate could be fluid. The later the plant is completed, the higher cost, according to the source.

Samsung did not immediately respond to a request for comment.

Chip makers are applying for billions in grants from the Biden administration thanks to the CHIPS and Science Act, aimed at ramping up semiconductor production in the United States. But increasing costs raise questions about how far those dollars will go. The bill was proposed in 2020, before a historic run-up in inflation that US officials are still working to tame.

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