In what could be the biggest economic investment in Central Texas history, tech giant Samsung plans to build 11 new chip manufacturing facilities in the Austin area over the next two decades, a move that could lead to nearly $200 billion in new investment and create more than 10,000 jobs, according to documents filed with the state.
After announcing plans to build a $17 billion semiconductor factory in Taylor, Samsung could increase its investment in the region by more than 10 times that amount if the proposed facilities were to be built.
The potential plans are outlined in 11 petitions Samsung has filed with Taylor and Manor school districts seeking tax relief for building the facilities. The demands, part of the state’s Chapter 313 incentives program, were posted Wednesday afternoon on the Texas Comptroller’s website.
The proposals call for 11 new manufacturing plants, including two in Austin, where Samsung already has a significant business, and nine in Taylor, a Williamson County town of about 17,000 people located 25 miles northeast of Austin. . The total investment would be $192.1 billion and create about 10,000 jobs if Samsung goes through with all plans, according to state filings.
About 1,800 of the new jobs would be in Austin, where two new factories would account for $24.5 billion in new investment, according to the documents. The other 8,200 new jobs and $167.6 billion in investment would go to nine new factories at Taylor.
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The first of the new fabs would be operational in 2034, more than a decade from now. According to the documents, two are not expected to be operational until 2042.
If the 11 Chapter 313 apps were approved by the Taylor and Manor school boards and Samsung built the fabs as proposed, the tax breaks could be huge for Samsung — combined, they’d total just under $4.8 billion on the duration of agreements. , assuming no change in tax rates, according to an analysis of the claims by a US statesman.
None of the Section 313 incentive agreements have yet received final school board approval. Samsung hasn’t made any guarantees that it will build the facilities, meaning it could always modify them, build them elsewhere, or shelve them altogether.
Samsung spokeswoman Michele Glaze said filing the incentive requests was part of the company’s long-term planning.
“We currently have no specific plans to build at this time, however, the Chapter 313 applications to the State of Texas are part of a long-term planning process by Samsung to assess the viability of potential construction. additional manufacturing facilities in the United States,” Glaze said in a written statement.
The state’s controversial Chapter 313 incentive program is set to expire at the end of this year. This has led to a rush of business applications over the past month as previously approved Chapter 313 incentives will remain in place.
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“A dramatic effect”
Ed Latson, executive director of the Austin Regional Manufacturers Association, said Samsung is already the region’s largest industrial company and the potential addition would have a huge impact on Austin’s tech sector. Investment on the scale described in state documents usually comes only from government-led projects, he said.
“Samsung’s commitment and investment in this area is in a class of its own,” Latson said. “We’re talking about the largest foreign investment in the United States right here in our area. It’s going to have a dramatic impact on the economic development and growth of central Texas.”
Samsung has had operations in Austin since 1997. The Austin site is the company’s largest facility outside of its headquarters in South Korea and employs approximately 10,000 people, including 3,000 Samsung employees and the rest under – contractors. Last year, Samsung announced plans to build a $17 billion factory in Taylor, which is expected to be the company’s most advanced yet. The company has 313 agreements for the two sites.
Latson said Samsung’s long history in central Texas likely gives it the confidence to consider expanding into the region.
“I think they’re here because there’s a great workforce here. It’s a good quality of life. They have a long history of success here and it gives them a lot of confidence that they are going to be successful and what they’re trying to accomplish in the future,” Latson said. “All of those things combined make this the right place for Samsung to expand in the United States.”
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Debate over tax breaks
Chapter 313 incentive agreements, named after a section of the state’s tax code, allow Texas school districts to provide significant tax breaks to businesses in exchange for projects that will create new jobs and other investments in their regions.
Local tax revenue foregone by school districts under Chapter 313 agreements is largely replaced by the state through its school funding formula, leading to criticism that school officials do not have no reason not to endorse them, regardless of the value of a project.
Samsung filed two previous requests for tax relief earlier this year, to Manor and Taylor, without detailing specific plans, which could be used to expand its current facilities in the Austin area.
Even without specific plans, Latson said the company has a lot of credibility in the region in terms of following up on projects in the area.
“I think it’s a bit of an unusual situation with (the Chapter 313 program) expiring, and there might be some kind of clock for these agreements to be filed before the end of the year, but I still think that it’s a company that does a lot of planning and has a foresight of how they want to operate and what we’re seeing is a glimpse of their future plans,” Latson said.
In a written statement, Governor Greg Abbott welcomed Samsung’s potential investment.
“Strong partnerships with companies like Samsung – who recognize the limitless possibilities Texas has to offer – provide greater opportunities for Texans, and this potential investment will bring billions in additional capital to continue to grow our business climate from world-class and diverse, highly-skilled workforce,” Abbott said. “These new facilities solidify the Lone Star State as a national leader in the semiconductor industry, and I thank Samsung for growing his investment in the hard workers of Central Texas.”
Thom Singer, CEO of the Austin Technology Council, said an expansion of this size by Samsung would have positive impacts across the region.
“Expanding companies like Samsung and creating more jobs in our region will have a lasting positive impact on our tech ecosystem,” Singer said. “As we look to the sustainability of the Central Texas tech community, we are fortunate to have so many diverse industries represented. From startups to large multinational corporations, Austin will continue to be home to companies changing the world.
The filings come as semiconductor companies consider unprecedented investments in the United States and lawmakers scramble to pass legislation to increase semiconductor production in key centers, including Texas. The legislation comes amid a global shortage of semiconductors, the computer chips that power everything from your laptop to your car. If passed, the legislation is expected to help strengthen the U.S. computer chip industry by allowing subsidies, tax credits and other financial incentives for semiconductor makers who build factories in the United States.
Texas is already one of the largest producers of semiconductors, exporting billions of dollars worth of chips every year, and in central Texas, semiconductor companies account for about a quarter of all manufacturing output in the region, according to the Austin Regional Manufacturers Association.
Samsung’s potential expansion alone would bolster the region’s reputation as a semiconductor hub.
Patrick Moorhead, technology analyst and founder of Austin-based Moor Insights and Strategy, said a semiconductor company building 11 fabs during that time would be unprecedented in the United States.
“If the Samsung deal goes through, it would make Austin a semiconductor hub for the next 20 years,” he said.
Apart from Samsung, several other semiconductor companies have said they are considering expansions in the region. NXP Semiconductors is considering a $2.6 billion expansion in Austin that would create up to 800 jobs, technology company Applied Materials said it is considering Hutto for a $2.4 billion research and development center, and chipmaker Infineon Technologies said it was considering Austin for $700 million. expansion.