By Leah Douglas and Alexandra Alper

(Reuters) -The Biden administration will award as much as $6.4 billion in grants to South Korea’s Samsung to broaden its chip manufacturing in central Texas as a part of a broader effort to spice up U.S. chipmaking, the Division of Commerce mentioned on Monday.

The funding from the 2022 Chips and Science Act will help two chip manufacturing services, a analysis heart and a packaging facility, in Taylor, Texas, the company mentioned, as beforehand reported by Reuters.

It is going to additionally allow Samsung to broaden its Austin, Texas, semiconductor facility, Commerce Division Secretary Gina Raimondo added, whereas boosting chip output for the aerospace, protection and auto industries and bolstering nationwide safety, administration officers informed reporters.

“(These investments) will permit the U.S. to as soon as once more lead the world, not simply in semiconductor design, which is the place we do now lead, but additionally in manufacturing, superior packaging, and analysis and improvement,” Raimondo mentioned.

Samsung Electronics (KS:) Co-CEO Kyung Kye Hyun mentioned: “To fulfill the anticipated surge in demand from U.S. clients, for future merchandise like AI chips, our fabs might be outfitted for cutting-edge course of applied sciences and assist deliver safety to the U.S. semiconductor provide chain.”

Samsung mentioned it expects to start manufacturing in 2026. Analysts have estimated Samsung is prone to start making 4-nanometer chips at its pilot manufacturing line and ultimately broaden to 2-nanometer chips.

The announcement, which made Samsung the third-largest Chips Act award recipient, as first reported by Reuters, is the most recent transfer by the Biden administration to construct out the chipmaking trade in the USA.

The purpose is to cut back reliance on China and Taiwan, because the U.S. share of world semiconductor manufacturing capability has fallen from 37% in 1990 to 12% in 2020, in keeping with the Semiconductor Trade Affiliation (SIA).

Lawmakers have warned that U.S. dependence on chips manufactured in Taiwan by the world’s prime contract chip producer, TSMC, is dangerous as a result of China claims the self-governed island as its territory and has reserved the best to make use of power to retake it.

“By investing in modern semiconductor manufacturing, we’re serving to safe this susceptible provide chain, boosting our nationwide safety and world competitiveness, and creating new jobs for Texans,” mentioned John Cornyn, a Republican U.S. senator from Texas who cosponsored the unique laws.

Samsung is anticipated to take a position roughly $45 billion in constructing and increasing its Texas services by means of the top of the last decade, mentioned senior administration officers.

“We applaud Samsung for investing boldly in U.S.-based manufacturing and salute the U.S. Commerce Division for making important headway in implementing the CHIPS Act’s manufacturing incentives and R&D applications,” SIA mentioned in a press release.

Intel (NASDAQ:) received $8.5 billion in grants final month whereas Taiwan’s TSMC clinched $6.6 billion in April to construct out its American manufacturing.