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PYEONGTAEK, South Korea (AP) — President Biden begins a trip to Asia with a focus on the computer chip shortage plaguing the world economy, and tours a Samsung computer chip factory that will serve as the model for a $17 billion semiconductor factory. The Korean electronics company plans to open in Texas.
Friday’s visit is a nod to one of Biden’s key domestic priorities in increasing the supply of computer chips. A semiconductor shortage last year hurt the availability of cars, kitchen appliances and other goods, caused higher inflation worldwide, and crippled Biden’s public approval among US voters.
Biden will grapple with numerous foreign policy issues during a five-day visit to South Korea and Japan, but he’s also put together a travel itinerary to reassure his audiences.
While previewing the trip aboard Air Force One, White House national security adviser Jake Sullivan said Samsung’s investment in Texas “will mean well-paying jobs for Americans and, most importantly, greater supply chain flexibility.”
Greeted by Biden at the factory in South Korea, the country’s new president will be Yoon Suk Yeol and Samsung Electronics Vice President Lee Jae-yong. Yoon is a political newcomer who just a little over a week ago became president to his first elected office. He campaigned to take a tougher stance against North Korea and strengthen the 70-year alliance with the United States.
Part of the computer chip shortage is the result of strong demand as much of the world is recovering from the coronavirus pandemic. But coronavirus outbreaks and other challenges have also caused semiconductor plants to close. US government officials predict that chip production will not be at their desired levels until early 2023.
According to the Semiconductor Industry Association, global computer chip sales in the first three months of this year amounted to $151.7 billion, a 23% increase from the same period in 2021.
More than 75% of global chip production comes from Asia. This is a potential vulnerability that the US hopes to protect through more domestic production and $52 billion in government investment in the industry through a bill that is being negotiated in Congress.
China’s risk of attacking Taiwan could possibly cut off the flow of high-end computer chips needed for military equipment and consumer goods in the US. Similarly, hermetic North Korea is testing ballistic missiles amid a coronavirus outbreak, a possible risk to South Korea’s manufacturing sector if brinksmanship escalates.
In terms of chip production, China tops the global pack with 24%, followed by Taiwan (21%), South Korea (19%) and Japan (13%). According to the Semiconductor Industry Association, only 10% of chips are made in the USA.
Samsung announced its facility in Taylor, Texas, in November 2021. It hopes to be operational in the second half of 2024. The South Korean electronics giant chose the site based on a number of factors, including government incentives and “readiness and stability.” local infrastructure
In a memo released Friday, the White House said semiconductor companies have announced nearly $80 billion in U.S. investments by 2025. That amount includes $20 billion for Intel’s factory outside of Columbus, Ohio, up to $30 billion by Texas Instruments, $1 trillion expansion investments in North Carolina by Wolfspeed and Global Foundries and SK Group.
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