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Samsung Under Pressure Following Chip Shortage Talks In White House

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The White House on Monday held a meeting with the semiconductor industry’s biggest names to discuss the ongoing global chip shortage. While the details of the talks remain tightly sealed, reports suggest that foreign chipmakers such as Samsung may require to respond immediately to the United States’ demands.

According to The Korea Herald, US President Joe Biden has made it clear that he wants global semiconductor companies to produce chips in America, not China. As such, Samsung is in a dilemma as it is now “torn between two strategically important markets.”

Samsung already operates a chip manufacturing plant in Austin, Texas. Though it is reportedly planning to build another one on American soil, industry watchers believe the company isn’t entirely sure of these plans. However, following this week’s discussions with the US President, the Korean firm may now require to come to a decision very quickly.

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In the meantime, the absence of a leader is hurting Samsung. The company is reportedly mulling a location either in Arizona, Austin, or New York. However, since its Vice Chairman and de-facto leader Lee Jae-yong is in jail, the Korean firm is finding it difficult to come to a decision. Of course, a $17 billion business decision requires the leader’s approval.

“Since the investment talk was held at the highest level in the US, it could prompt Samsung to finalize its discussions with the three state governments and execute the plan soon,” said an industry insider.

White House talks over chip shortage issues may require Samsung to act quick

The ongoing global chip shortage is a result of most chipmakers opting for a fables business model. The likes of Qualcomm and AMD, who design their own chips, all outsource the actual manufacturing to other companies like Samsung or TSMC. And since there aren’t many chip manufacturing companies out there, demand has outpaced supply.

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The recent White House meeting was primarily to discuss the building of new manufacturing facilities for chips in the US. President Biden wants all big players of the industry to start manufacturing on American soil.

“These chips, these wafers … batteries, broadband — it’s all infrastructure,” he said, holding up a wafer. “We need to build the infrastructure of today and not repair the one of yesterday. The plan I propose will protect our supply chain and revitalize American manufacturing.”

This move not only strengthens America’s chip supply chain but also further hurts that of China. Samsung, meanwhile, is now under pressure as it has to choose between the two. The Korean firm operates large-scale memory fabs in China. It is the world’s No. 1 producer of memory chips.

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Moreover, the Korean government is also urging domestic chipmakers to expand local manufacturing. The country is reportedly working on developing a comprehensive package to encourage investments in the foundry segment. All this makes it even more difficult for Samsung to decide on the US investment.

Samsung was the only South Korean participant in Monday’s virtual meeting. The company’s foundry business head, Choi Si-young, represented it at the conference. CEOs of Google’s parent company, Alphabet, as well as Intel, General Motors, and Ford were also present. Representatives of TSMC, the world’s largest contract chipmaker and Samsung’s main rival in the industry, also tuned into the videoconference.