Why Samsung, TSMC are keeping cutting-edge chip production at home despite overseas incentives

This article was first published by The Korea Times in a partnership with the South China Morning Post.

Samsung Electronics and Taiwan Semiconductor Manufacturing Company (TSMC) are keeping their most cutting-edge semiconductor plants on their respective home turfs, even as the companies rush to expand investments in the US, Japan and elsewhere.

Samsung, one of the largest chip makers in the world, planned to invest a total of 500 trillion won (US$371 billion) by 2047 in a “mega-cluster” semiconductor project south of Seoul, the South Korean government said in mid-January. The facility is expected to focus on advanced products including chips made using the 2-nanometre process.

Days after the Korean announcement, TSMC chairman Mark Liu said at an earnings call that the company was planning to build fabs that make 2-nm chips in science parks in Taiwan’s Hsinchu and Kaohsiung cities. He also revealed that the firm was working to get government approval to build another 2-nm fab in Taichung.

Both companies aim to begin mass production using 2-nm process technology in 2025.

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Biden tours new Taiwanese chip-making plant in Arizona, fans US-China semiconductor rivalry

Samsung and TSMC are doubling down on domestic investments as they grapple with various challenges in building production bases in the US amid Washington’s drive to boost local chip manufacturing and undermine China’s goal of achieving chip self-sufficiency.

TSMC currently has two fabs under construction in Arizona, which were initially expected to start mass-producing 4-nm products this year and 3-nm products by 2026. Samsung has been building a US$17 billion fab in Texas since 2021, which was set to start out making 4-nm chips.

However, both companies have delayed