Samsung’s new Texas chip plant cost rises above $25 billion

A chip plant that South Korea’s Samsung Electronics Co Ltd (005930.KS) is building in Taylor, Texas, will cost the world’s biggest memory chipmaker over $25 billion, up more than $8 billion from initial forecasts, according to three people familiar with the matter. The increase in cost is primarily due to inflation, the people said, declining to be named because the information was not public. “The higher construction cost is about 80% of the cost increase,” one of the sources said. “The materials have gotten more expensive,” the source added. A second source said “the newly estimated cost could go up even more if the construction of the Taylor plant gets delayed,” adding that the estimate could be fluid. “The later the plant is completed, the higher cost we would be looking at.” Samsung did not immediately respond to a request for comment. Chipmakers are applying for billions in grants from the Biden administration thanks to the CHIPS Act, aimed at ramping up chip production in the United States. But increasing costs raise questions about how far those dollars will go. The bill was proposed in 2020, before a historic run-up in inflation that U.S. officials are still working to tame. U.S. Commerce Department officials said early this month that most government grants will only cover up to 15% of the cost of new plants. Meanwhile, in the three years since lawmakers first floated the $52 billion figure for CHIPS Act grants, of which only $39 billion is now earmarked for direct investment in plant construction, the cost of labor has risen sharply, along with the price of construction materials like steel. That could push up the cost of what are already huge spending plans. Last year, Taiwan Semiconductor Manufacturing Co (2330.TW), the world’s largest contract chip manufacturer, announced it was more than tripling a planned investment in a new plant in Arizona to $40 billion. Meanwhile, Intel Corp (INTC.O) announced a $20 billion chip factory in Oh