In what could be the largest economic investment in Central Texas history, tech giant Samsung is considering building 11 new chip manufacturing facilities in the Austin area over the next two decades, a stunning move that could bring nearly 200 billion in new investment and create more than 10,000 jobs, according to documents filed with the state.
Having just announced 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 are built.
The proposals are outlined in 11 applications Samsung has filed with the Taylor and Manor school districts seeking tax breaks to build the facilities. The applications, part of the state’s Chapter 313 stimulus program, were posted Wednesday on the Texas Comptroller’s website.
The proposals call for 11 new manufacturing plants, including two in Austin, where Samsung already has a significant presence, and nine in Taylor, a Williamson County city of about 17,000 people 25 miles northeast of Austin. The total investment will be $192.1 billion and create about 10,000 jobs if Samsung goes ahead with all plans, according to documents filed with the state.
About 1,800 of the new jobs will be in Austin, where two factories will represent $24.5 billion of the new investment, according to the filings. The other 8,200 new jobs and $167.6 billion in investment will go to nine new plants in Taylor.
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The earliest any of the new factories will be operational is 2034, or more than a decade from now. Two are not expected to be up and running until 2042, according to the documents.
If all 11 of the Chapter 313 applications are approved by the Taylor and Manor school boards, and Samsung builds the factories as proposed, the tax break could be huge for Samsung — combined, it would come to just under $4.8 billion dollars over the term of the agreements, assuming no change in tax rates, according to a U.S. government analysis of filings.
None of the Chapter 313 incentive agreements have received final approval from school boards. Samsung has made no guarantees that it will build the facilities, meaning it could still change them, build them somewhere else or abandon them altogether.
Michele Glaze, a Samsung spokeswoman, said filing the incentive applications is part of the company’s long-term planning.
“We currently have no specific plans to build at this time, but the Chapter 313 applications for the state of Texas are part of Samsung’s long-term planning process to assess the viability of potentially building additional manufacturing facilities in the United States,” Glaze said in a statement.
The state’s controversial Chapter 313 stimulus program is set to expire at the end of this year. That has led to an influx of companies applying in recent months, as Chapter 313 incentives previously approved will remain in effect.
According to the Texas comptroller’s office, more than 400 applications were filed in 2022, nearly triple the all-year high of about 150 previously.
“I’ve never seen anything like this,” said Nathan Jensen, a University of Texas professor who studies taxpayer-funded corporate incentives. “I think basically (companies) are just treating this as an options contract — they’re just putting (applications in) to lock in incentives in the future” in case they decide to expand later.
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Ed Latson, executive director of the Austin Regional Association of Manufacturers, said Samsung is already the largest industrial company in the region and the potential addition would have a huge impact on Austin’s technology sector. An investment on the scale described in the government 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 region. This will have a dramatic impact on the economic development and growth of Central Texas.”
Samsung has been operating in Austin since 1997. The Austin location is the company’s largest facility outside of its South Korean headquarters and employs about 10,000 people, with 3,000 of them Samsung employees and the rest contractors. Last year, Samsung announced plans to build a $17 billion factory in Taylor, which is expected to be the company’s most advanced to date. The company has 313 contracts for both sites.
Latson said Samsung’s long history in Central Texas likely gives him 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, successful history here, and that gives them a lot of confidence that they will succeed in what they’re trying to achieve in the future,” Latson said. “All of those things combined together make this the right place for Samsung to grow in the United States .”
Taylor Mayor Brand Rydell said learning the city could gain up to 10 additional factories was both mind-boggling and exciting.
“I still can’t imagine the (already planned) $17 billion factory, let alone that,” Rydell said. “It was literally shocking to hear that. It came as a bit of a surprise that they were willing to invest so much and potentially commit so much to Taylor.”
Rydell said the potential expansion would take Taylor into uncharted territory and also benefit the entire region.
“It will certainly bring many challenges and also many opportunities. It’s a good situation, Rydell said. “We’re always going to have challenges, but I think what Samsung has outlined and what they could potentially do in central Texas opens up a lot of opportunities, a lot of opportunities for the entire region.”
Rydle said Taylor officials and Williamson County leaders have some indication that Samsung may be interested in expanding beyond its original plans, in part because the company is only using about one-fifth of the land it acquired in Taylor for its already-operating factory .
“We had an understanding and appreciation that despite the fact that Samsung committed to this initial $17 billion project, there’s a reason they’re acquiring over 1,200 acres rather than building one factory,” Rydell said. “So we always suspected there would be a next phase. What that meant, we weren’t sure.”
Rydell said the city has not been approached by Samsung about any discussions about additional phases of the project or requests for potential incentives.
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Chapter 313 incentive agreements, which are named after a section of the state’s tax code, allow Texas school districts to provide significant property tax breaks to companies in exchange for projects that will create new jobs and other investments in their districts.
Local tax revenue that school districts give up under Chapter 313 agreements is largely replaced by the state through its school funding formula, leading to criticism that school officials have no reason not to approve it, regardless of the project’s merit.
Samsung filed two previous tax break applications earlier this year, in Manor and Taylor, without specifying specific plans that could be used to expand its current facilities in the Austin area.
Even without concrete plans, Latson said the company has a lot of confidence in the region in terms of executing projects in the region.
“I think it’s a little bit of an unusual situation with (the Chapter 313 program) expiring and there may be some kind of clock to get these agreements filed before the end of the year, but I still think they’re a company that’s doing a lot of planning and they have a vision for how they want to operate, and what we’re seeing is a glimpse of their future plans,” Latson said.
In a statement, Governor Greg Abbott praised Samsung’s potential investment.
“Close partnerships with companies like Samsung – who recognize the limitless opportunities that Texas has to offer – bring greater opportunity to Texans, and this potential investment will bring billions in additional capital to continue to develop our world-class and diverse business climate, highly skilled workforce,” said Abbott. “These new facilities solidify the Lone Star State as the nation’s leader in semiconductor manufacturing, and I thank Samsung for increasing their investment in the hardworking people of Central Texas.”
Tom Singer, CEO of the Austin Technology Council, said a Samsung expansion of this size would have a positive effect on the entire region.
“Expanding companies like Samsung and creating more jobs in our region will have a positive, long-lasting impact on our technology ecosystem,” Singer said. “As we look at the sustainability of the tech community in Central Texas, we are fortunate to have so many different industries represented. From startups to large multinationals, Austin will continue to be home to companies that are changing the world.”
The filings come as semiconductor companies consider unprecedented investment in the U.S. and lawmakers work to pass legislation designed to boost semiconductor production in key centers including Texas. The legislation comes amid a global shortage of semiconductors, the computer chips that run everything from your laptop to your car. If passed, the legislation is expected to help strengthen 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 largest semiconductor producers, 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 in that amount of time would be unprecedented in the United States.
“If the Samsung deal goes through, it will make Austin a semiconductor hub for the next 20 years,” he said.
Outside of Samsung, several other semiconductor companies have said they may expand in the region. NXP Semiconductors is considering a $2.6 billion expansion in Austin that would create up to 800 jobs, technology firm Applied Materials said it is considering Hutto for a $2.4 billion research and development center, and chip maker Infineon Technologies said it is considering a $700 million Austin expansion.