How Samsung and Texas Instruments made the Lone Star State the hub of U.S. chip manufacturing
On a 1,200-acre plot of land in a small town 30 miles north of Austin, Texas, South Korean giant Samsung is spending $17 billion to build a semiconductor fabrication plant.
Four hours north by car, in the city of Sherman, Texas Instruments is at the early stages of a $30 billion project, the largest new chip investment in Texas.
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It’s not by accident.
As geopolitical tension between China and Taiwan drives chipmakers to turn to the U.S. for manufacturing, Texas has emerged as the place to do business, thanks to a combination of low taxes and new subsidies.
Since the $52 billion CHIPS and Science Act was first introduced in 2020, more than 50 new U.S. semiconductor projects have been announced totaling over $210 billion. More than $61 billion of that’s in Texas, with six projects expected to create more than 8,000 jobs.
“Because we have ports, because we have access to materials, because of our low cost of doing business, we are best situated to lead this next generation of chip manufacturing,” Republican Texas Gov. Greg Abbott told CNBC in an interview in April.
In June, Abbott signed the Texas CHIPS Act into law. It set aside $1.4 billion for chip companies to manufacture in the Lone Star State and for universities willing to build related research and development centers.
Samsung, Texas Instruments, Infineon, GlobalWafers, NXP, X-FAB and Applied Materials have all ramped up Texas operations in recent months. Apple and Amazon are also designing some of their custom chips in Texas.
When it comes to new chip investments, Arizona leads with a $20 billion fab coming from Intel and a $40 billion site from Taiwan Semiconductor Manufacturing Co., the world’s top advanced chipmaker. However, Texas has the highest number of total fabs and is a close second for new investments.
CNBC visited Texas for a rare look inside the clean rooms of three huge chip fabs, getting a glimpse of the manufacturing heart of the plant, where workers don special suits to protect the tiny microchips from skin particles and dust.
Melissa Hebert, Infineon’s senior manager of Austin site projects shows CNBC’s Katie Tarasov around inside the Infineon chip fabrication plant in Austin, Texas, on June 14, 2023.
Andrew Evers
We also toured the two biggest new projects under construction in the state.
Samsung’s new plant in the town of Taylor is scheduled to come online next year. It will be the location of Samsung’s first advanced chips produced in the U.S, but it’s not the company’s first foray in the state.
Samsung came to Texas in 1996, breaking ground on a big fab in Austin that’s now used entirely for foundry, making logic chips for outside customers. The company opened a second fab there in 2007.
“Our customers love to come to Texas,” said Jon Taylor, Samsung’s corporate vice president of fab engineering. “It’s equidistant from either coast and we know that some of the world’s most prominent fabless companies are actually in the United States.”
With the new facility near Austin, it will “increase their ability to source their chips domestically and not have to go into areas of the world where they may have some discomfort,” Taylor said.
Texas Instruments’ fab in Sherman, a town of 45,000 people 60 miles north of Dallas, is an even bigger investment. And it adds to the company’s legacy in Sherman, which dates back to a separate facility in 1966.
“Texas Instruments went a long way in putting Sherman on the map,” said David Plyler, the city’s mayor, adding that the new fab represents “a huge investment in our community.”
Plyler said Sherman’s “entire tax base was around $4 billion.”
Texas Instruments was founded in 1930 as Geophysical Service Inc., adopting its current name in 1951. Seven years after that, an engineer at the company named Jack Kilby filed for a patent for the integrated circuit. That invention opened up the possibility of miniaturizing chips by creating the entire circuit, not just the transistors, out of silicon.
Texas Instruments went on to design products like the first handheld electronic calculator in 1967, and is still known for graphing calculators that are used in classrooms around the world.
“It is very much so the calculator company to much of the world, but we are so much more than that,” said Kyle Flessner, senior vice president of Texas Instruments’ technology and manufacturing group. “If you have an electronic device, you almost certainly have a TI semiconductor chip inside of it. So we have 80,000 products that ship out to 100,000 different customers.”
Flessner said the company’s technology is in “about anything that you can plug into a wall or that has a cord in it.”
CNBC interviewed Flessner at Texas Instruments’ RFAB2 fab in Richardson, Texas, a suburb just north of Dallas. The plant came online in September and marks the company’s second plant in Richardson, where Texas Instruments plans to manufacture a combined 100 million analog chips per day.
Water and power
Texas Instruments’ $17 billion chip fab project in Sherman, Texas, on June 15, 2023.
Andrew Evers
Flessner also took us to the construction site in Sherman. Among the major draws there, he said, were water and power. Local lawmakers in the past have purchased water rights at the nearby Lake Texoma, which hovers over the Texas-Oklahoma border and is one of the largest reservoirs in the country.
“We have plenty of water, which is gold currency for cities and economic development right now,” Plyler said.
Making chips takes billions of gallons of water each year. Texas Instruments isn’t the only company taking advantage of the area.
GlobalWafers, based in Taiwan, is expanding in Sherman, with plans to spend $5 billion on the biggest silicon wafer factory in the U.S., producing the bare discs on which chips are made.
Meanwhile, about a quarter of the state remains in drought, leaving businesses vulnerable to a rapidly changing climate.
“We have the Texas Water Board that’s working on that and legislation that we’re working on this session to make sure that with a growing population in Texas, we will be able to provide for the water needs, not just of businesses, but also for our growing population,” said Abbott.
Texas Instruments and Samsung are both increasing water reuse goals at their new facilities.
Then there’s the power requirements. Each of the advanced chip-etching extreme ultraviolet (EUV) lithography machines that Samsung will use in Taylor is rated to consume about 1 megawatt of electricity, or 10% more than the previous generation.
Texas has a uniquely independent grid that largely cuts it off from borrowing power across state lines. In 2021, that grid failed during an extreme winter storm, leaving millions of Texans without power and causing at least 57 deaths.
“I already signed 12 laws to make the power grid more reliable, more resilient and more secure,” Abbott said. “We can definitely assure any business moving here they will have access to the power they need, but also at a low cost.”
Samsung, Infineon and NXP were forced to shut down their Austin fabs temporarily during the blackout in February 2021. Samsung, Infineon and others have since switched entirely to renewable power.
‘Texas is spacious’
Samsung is building a $17 billion chip fab on 1,200 acres in Taylor, Texas, 30 miles north of Austin. Construction site shown here on April 21, 2023.
Katie Brigham
Since the early days of Silicon Valley, the cost of making smaller and smaller transistors has skyrocketed, along with the size of the machines and amount of land needed for manufacturing. Texas has long been famous for plentiful land and policies that are favorable to new businesses.
“Texas is spacious, it’s huge, and then it has great support for ease of business,” said Jinman Han, the head of Samsung’s U.S. chip business. “At the same time we are having great support from our local governments in Texas, even from the Texas governor himself.”
Texas is one of only a handful of states with no income tax. Combine that with sales tax exemptions on manufacturing machinery and a variety of other tax waivers, and it’s understandable why Caterpillar, Charles Schwab, Hewlett-Packard and Oracle have all relocated their headquarters to Texas in recent years.
Germany’s Infineon, one of the world’s biggest providers of automotive chips, has been in the U.S. for 25 years and makes many of its semiconductors in Austin.
“The number of chips in an automotive, in an EV, in automotive in general is drastically increasing,” said Melissa Hebert, Infineon’s senior manager of Austin site projects. “And all the connectivity, everything communicating within the car, around the car is increasing the chip content in every vehicle.”
In 2020, Infineon expanded manufacturing in Texas, buying Cypress Semiconductor for about $10 billion.
“With the support we’ve had from the state legislature and then also the federal support in this industry, Texas continues to be a hub for where we can build this manufacturing,” said Hebert, before taking us inside Infineon’s clean room.
NXP Semiconductors, which is based in the Netherlands, also has two fabs in Austin and recently made plans for a $2.6 billion expansion that would add an additional four-story fab.
X-FAB, a chip company that’s been in Texas for more than two decades, recently announced a $200 million expansion of its silicon carbide fab in north Texas.
Suppliers are following.
“When you start bringing in a fab like that, you need to build the ecosystem,” said Samsung’s Taylor. “There’s a lot of discussion these days about onshoring supply chains.”
Of the $17 billion price tag for Samsung’s fab in Taylor, $11 billion is going to machinery and equipment. Texas Instruments said such tools will account for at least 65% of its new fab costs in Sherman, including the $200 million EUV lithography machines made by ASML, which has offices in Dallas and Austin.
The world’s next biggest provider of semiconductor equipment, Applied Materials, has been in Austin since 1992.
The boom in fab development in the U.S. comes as some major chip companies face a slowdown amid economic uncertainty. Intel, the third-biggest advanced chipmaker, aims to cut costs by up to $10 billion over the next three years, and is selling its 61-acre Austin research hub.
Samsung reported dismal first-quarter earnings in April and cut production of memory chips in response to falling prices. But it’s pouring more money into the foundry side of its business, making logic chips in Texas, and has plans to expand at its new facility near Austin.
“We have 1,200 acres and that first factory is taking up about 250 acres of it,” Taylor said. “So we have room to expand.”
Similarly, Texas Instruments is going big on fabs even after earlier this year reporting its first sales decline since 2020.
“We’re in the relatively early stages, but we are making tremendous progress towards having production out of this facility in 2025,” Flessner said.
Technology
Japan’s antitrust watchdog issues Google ‘cease and desist’ order over unfair trade practices
An attendee takes a photograph using a Google Pixel 9 smartphone during the CP+ trade show in Yokohama, Japan on February 27, 2025.
Tomohiro Ohsumi | Getty Images News | Getty Images
The Japan Fair Trade Commission (JFTC) on Tuesday issued a cease and desist order against Google for unfair trade practices regarding search services on Android devices— a move that aligns with similar crackdowns on firms in the UK and the U.S.
In a statement, the Commission said the American tech giant violated Japan’s anti-monopoly law by requiring Android device manufacturers to prioritize its own search apps and services through licensing agreements.
While Google develops the Android operating system, separate manufacturing companies like Samsung and Lenovo produce handheld Android products, such as smartphones and tablets. Thus, licensing agreements are necessary to grant these manufacturers permission to preinstall Google apps, including its Play Store, onto devices.
However, JFTC said Google also used licenses to require manufacturers to preinstall and prominently feature Google Search and Chrome on devices, with at least six such agreements in effect with Android makers as of December 2024.
The Commission added that the company required manufacturers to exclude rival search services as a condition of its advertising revenue-sharing model.
Under Japan’s anti-monopoly law, businesses are prohibited from carrying out trade on restrictive terms that unjustly impede transaction partners’ business activities.
JFTC first published the commencement of its probe into Google on October 23, 2023, and in April 2024, it approved a commitment plan from Google that addressed some of its anti-competitive concerns.
The cease and desist order demonstrates a harder stance taken by the Japanese government as well as its first such action against a U.S. tech giant.
The move also comes amid a trend of anti-competitive actions against Google globally. According to JFTC, it coordinated its probe with other overseas competition watchdogs that had experience investigating Google.
In a landmark case last year, a federal U.S. judge ruled that Google held an illegal monopoly in the search market, saying that its exclusive search arrangements on Android and Apple’s iPhone had helped to cement its dominance in the space.
Meanwhile, Britain’s competition watchdog opened an investigation into Google’s search services in January following the country’s implementation of new competition rules.
JFTC’s cease and desist orders that Google stop mandating that its own services be installed and featured prominently on smartphones.
Additionally, the company should relax its restrictive conditions for the distribution of advertising revenue, allowing manufacturers to choose from a variety of options.
Google has also been asked to appoint an independent third party that will report to the JFTC on its compliance with the cease and desist order over the next five years.
Nvidia CEO Jensen Huang delivers the keynote address during the Nvidia GTC 2025 at SAP Center on March 18, 2025 in San Jose, California.
Justin Sullivan | Getty Images
Nvidia said on Tuesday that it will take a quarterly charge of about $5.5 billion tied to exporting H20 graphics processing units to China and other destinations. The stock slid more than 6% in extended trading.
On April 9, the U.S. government told Nvidia it would require a license to export the chips to China and a handful of other countries, the company said in a filing.
The disclosure is the strongest sign so far that Nvidia’s historic growth could be slowed by increased export restrictions on its chips, which the U.S. government says can be used to create supercomputers for military uses. Nvidia reports fiscal first-quarter results on May 28.
During President Biden’s administration, the U.S. restricted AI chip exports in 2022 and then updated the rules the following year to prevent the sale of more advanced AI processors. The H20 is an AI chip for China that was designed to comply with U.S. export restrictions. It generated an estimated $12 billion to $15 billion in revenue in 2024.
Nvidia CEO Jensen Huang said on the company’s last quarterly earnings call in February that revenue from China had dropped to half of pre-export control levels. Huang warned that competition in China is growing, and for the second straight year, Nvidia listed Huawei as a competitor in its annual filing.
China is Nvidia’s fourth-largest region by sales, after the U.S., Singapore, and Taiwan, according to the company’s annual report. More than half of its sales went to U.S. companies in its fiscal year that ended in January.
Nvidia’s H20 chip is comparable to the H100 and H200 AI chips used in the U.S. and other countries, but it has slower interconnection speeds and bandwidth. It’s based on a previous generation of AI architecture called Hopper introduced in 2022. Nvidia is now focusing on selling its current generation of AI chips, called Blackwell.
DeepSeek, the Chinese company whose competitive AI model R1 unveiled earlier this year upended markets, used H20 chips in its research.
In addition to the existing Chinese export controls, Nvidia also faces new restrictions on what it can export starting next month, under “AI diffusion rules” first proposed by the Biden administration.
Nvidia has argued that further controls on its chips would stifle competition and potentially even erode U.S. competitiveness in technology. The company previously said it moved some of its operations, including testing and distribution, out of China after the 2022 export controls.
At the company’s annual conference last month, when asked about Chinese export controls, Huang said Nvidia works to comply with the law, but he also noted that about half of the world’s AI researchers are from China, and many of those work at U.S.-based AI labs.
Nvidia said in Tuesday’s filing that the U.S. government told the company on Monday that the license requirement for H20 chips would be in effect “for the indefinite future.”
Nvidia shares have dropped 16% this year, largely due to President Trump’s announcement of widespread tariffs on top trading partners. While exemptions have been made on various electronics products, including smartphones, computers and semiconductors, Trump and some officials said over the weekend that the reprieve was temporary and part of plans to apply separate tariffs to the sector.
Shares of Advanced Micro Devices dropped more than 7% in after-hours trading on Tuesday following Nvidia’s disclosure. AI chipmaker Broadcom fell almost 4%.
WATCH: Nvidia says U.S. requires license to export H20 products to China
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