President Joe Biden is opening his trip to Asia with a focus on the computer chip shortage that has bedevilled the world economy, touring a Samsung computer chip plant that will serve as a model for a $17 billion semiconductor factory that the Korean electronics company plans to open in Texas.
The visit Friday is a nod to one of Biden’s key domestic priorities of increasing the supply of computer chips. A semiconductor shortage last year hurt the availability of autos, kitchen appliances and other goods, causing higher inflation worldwide and crippling Biden’s public approval among US voters.
Biden will grapple with a multitude of foreign policy issues during a five-day visit to South Korea and Japan, but he also crafted an itinerary clearly meant to tend to the concerns of his home audience as well.
Previewing the trip aboard Air Force One, White House national security adviser Jake Sullivan said Samsung’s investment in Texas will mean “good-paying jobs for Americans and, very importantly, it will mean more supply chain resilience.”
Greeting Biden at the plant in South Korea will be the country’s new president, Yoon Suk Yeol, and Samsung Electronics Vice Chairman Lee Jae-Yong. Yoon is a political newcomer who became president, his first elected office, slightly more than a week ago. He campaigned on taking a tougher stance against North Korea and strengthening the 70-year alliance with the US
The chip plant showed the unique nature of manufacturing as visitors were required to don laboratory coats and blue booties to help keep the facility clean. Biden and Yoon, who did not wear protective clothing, saw a demonstration of the machinery, including two pieces of American, made equipment for producing semiconductors.
Part of the computer chip shortage is the result of strong demand as much of the world emerged from the coronavirus pandemic. But coronavirus outbreaks and other challenges also caused the closure of semiconductor plants. US government officials have estimated that chip production will not be at the levels they would like until early 2023.
Global computer chip sales totalled $151.7 billion during the first three months of this year, a 23% jump from the same period in 2021, according to the Semiconductor Industry Association.
More than 75% of global chip production comes from Asia. That’s a possible vulnerability the U..hopes to protect against through more domestic production and $52 billion worth of government investment in the sector through a bill being negotiated in Congress.
The risk of Chinese aggression against Taiwan could possibly cut off the flow of high-end computer chips that are needed in the U.S. for military gear as well as consumer goods. Similarly, hermetic North Korea has been test-firing ballistic missiles amid a coronavirus outbreak, a possible risk to South Korea’s manufacturing sector should the brinksmanship escalate.
In terms of chip production, China leads the global pack with a 24% share, followed by Taiwan (21%), South Korea (19%) and Japan (13%). Only 10% of chips are made in the US, according to the Semiconductor Industry Association.
Samsung announced the plant in Taylor, Texas in November 2021. It hopes to begin operations in the second half of 2024. The South Korean electronics giant chose the site based on a number of factors, including government incentives and the “readiness and stability” of local infrastructure.
The White House said in a fact sheet issued Friday that semiconductor companies have announced nearly $80 billion in US investments through 2025. That sum includes $20 billion for Intel’s plant outside Columbus, Ohio, up to $30 billion for Texas Instruments, a $1 trillion expansion by Wolfspeed in North Carolina and investments by Global Foundries and SK Group.
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