11 new fabs, 10,000 new jobs
In what could be the biggest economic investment in Central Texas history, technology giant Samsung is considering building 11 new chipmaking facilities in the Austin area over the next two decades, a stunning 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.
Fresh off 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 described in 11 applications Samsung has filed with the Taylor and Manor school districts seeking tax breaks for building the facilities. The applications, 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, with two in Austin, where Samsung already has a significant operation, 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 would create about 10,000 jobsif Samsung went through with all of the plans, according to the documents filed with the state.
About 1,800 of the new jobs would be in Austin, where two new fabs would account for $24.5 billion of the new investment, according to the documents. The other 8,200 new jobs and $167.6 billion in investment would go into nine new plants in Taylor.
More:‘Exciting and challenging:’ Taylor braces for a boom as $17B Samsung plant moves ahead
The earliest any of the new fabs would be up and running is 2034, or more than a decade from now. Two aren’t projected to be up and running until 2042, according to the documents.
If all 11 of the Chapter 313 applications 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 would total just short of $4.8 billion over the lives of the agreements, assuming no change in tax rates, according to an American-Statesman analysis of the applications.
None of the Chapter 313 incentives agreements have yet received final approval from the school boards. Samsung has made no guarantees it will build the facilities, meaning it still could alter them, build them somewhere else or shelve them altogether.
Michele Glaze, a spokesperson for Samsung, said filing the incentives applications is part of long-term planning for the company.
“We currently do not have 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 of Samsung to evaluate the viability of potentially building additional fabrication plants in the United States,” Glaze said in a written statement.
The state’s Chapter 313 incentives program, which has been controversial, is set to expire at the end of this year. That has led to a rush of company’s applying in recent month, because Chapter 313 incentives approved before then will remain in place.
More:Even without firm plans, Samsung seeks new incentive deals for Austin, Taylor sites
‘A dramatic effect’
Ed Latson, executive director of the Austin Regional Manufacturers Association, said Samsung is already the biggest industrial company in the region, and the potential addition would have a tremendous impact on Austin’s technology sector. An investment on the scale outlined in the state documents usually only comes from government-led projects, he said.
“Samsung’s commitment and investment in this area are in a class of their own,” Latson said. “We’re talking about the largest foreign investment in the United States right here in our region. It’s going 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 South Korea headquarters and employs about 10,000 people, with 3,000 of those Samsung employees and the rest contractors. Last year, Samsung announced plans to build a $17 billion factory in Taylor, expected to be the company’s most advanced to date. The company has 313 agreements for both sites.
Latson said Samsung’s long history in Central Texas likely gives it the confidence to consider expansion in the region.
“I think they’re here because there’s a terrific workforce here. It’s a good quality of life. They have a long successful history here and that gives them a lot of confidence that they’re going to succeed and what they’re trying to accomplish in the future,” Latson said. “All those things combined together make this the right place for Samsung to be growing in the United States.”
More:For Austin expansion, NXP seeking up to $140 million in tax breaks
Debate over tax breaks
Chapter 313 incentive agreements, which are named for a section of the state’s tax code, allow school districts in Texas to give significant property tax breaks to companies in exchange for projects that will create new jobs and other investments in their areas.
Local tax revenue that school districts waive under Chapter 313 agreements is substantially replaced by the state through its school funding formula, leading to criticism that school officials have no reason not to approve them regardless of a project’s worthiness.
Samsung filed two previous applications for tax breaks earlier this year, in Manor and Taylor, without detailing specific plans, that could be used for expansion at its current Austin-area facilities.
Even without specific plans, Latson said the company has a lot of credibility in the region in terms of following through with projects in the region.
“I think it’s an unusual situation a little bit with (the Chapter 313 program) expiring, and there might be some sort of clock to get these agreements filed before the end of the year, but I still think that they are a company that does a lot of planning and has foresight into how they want to operate and what we’re seeing is a glimpse of their future plans,” Latson said.
In a written statement, Gov. Greg Abbott lauded the potential investment by Samsung.
“Close partnerships with companies like Samsung — who recognize the boundless possibilities Texas has to offer — are bringing greater opportunities to Texans, and this potential investment will bring billions of additional capital to continue growing our world-class business climate and diverse, highly-skilled workforce,” Abbott said. “These new facilities solidify the Lone Star State as the nation’s leader in the semiconductor industry, and I thank Samsung for increasing their investment in the hardworking people of Central Texas.”
Thom Singer, CEO of the Austin Technology Council, said an expansion of this size by Samsung would have positive impacts on the entire region.
“The expansion of companies like Samsung, and the creation of more jobs in our region, will have a positive lasting impact on our technology ecosystem,” Singer said. “As we look to the sustainability of the Central Texas technology community we are fortunate to have so many diverse industries represented. From startups to large multinational companies, Austin is going to continue to be the home for companies that are changing the world.”
The filings come as semiconductor companies are considering unprecedented investments in the U.S and lawmakers are working to pass legislation designed to increase semiconductor production in key hubs including Texas. The legislation comes amid a global shortage of semiconductors, the computer chips that operate everything from your laptop to your car. If passed, the legislation is expected to help bolster the U.S. computer chip industry by authorizing grants, tax credits, and other financial incentives for semiconductor manufacturers that build plants in the United States.
Texas is already one of the biggest producers of semiconductors, exporting billions of dollars worth of chips each year, and in Central Texas, semiconductor companies make up about a quarter of all manufacturing output in the region, according to the Austin Regional Manufacturers Association.
Samsung’s potential expansion alone would further boost the region’s reputation as a semiconductor hub.
Patrick Moorhead, a technology analyst and founder of Austin-based Moor Insights and Strategy, said a semiconductor company building 11 fabs over that time frame would be unprecedented in the United States.
“If the Samsung deal goes through, this would make Austin a semiconductor hub for the next 20 years,” he said.
Outside of Samsung, several other semiconductor companies have said they are considering expansions n the region. NXP Semiconductors is considering a $2.6 billion expansion in Austin that would create up to 800 jobs, tech firm Applied Materials has said that it’s considering Hutto for a $2.4 billion research and development center, and chipmaker Infineon Technologies said that it’s considering Austin for a $700 million expansion.