Samsung has wowed central Texas with what could be the biggest economic investment in the region ever, as it announced it is considering building 11 new chip fabrication facilities in the Austin area over the next two decades. The move could result in almost $200 billion in new investment and create 10,000 jobs, according to official documents filed with the state.
Samsung had just announced plans for a $17 billion factory in Taylor Texas. Now its new proposal means it could increase investment in the state by over 10 times that amount, if it follows through on the proposals.
The proposals were revealed when Samsung filed applications with the Taylor and Manor school districts, seeking Chapter 313 incentives, which would offer Samsung substantial tax breaks on the new facilities. The applications were posted on the Texas Comptroller’s website on Wednesday.
Construction at Samsung’s current $17 billion facility is progressing in Taylor. According to the new documents, the company is now considering building 11 new facilities in Central Texas, with nine of them potentially being built on the site of the exiting project.
Documents indicate of the 11 new manufacturing plants, two would be built in Austin, where Samsung already has a robust presence, and the other nine would be built in Taylor, a town with a population of 17,000 people, about 25 miles northeast of Austin. Total investment is pegged at about $192.1 billion if Samsung follows through on all that it has proposed.
Of the 10,000 jobs it would create, about 1,800 would be in Austin. The two fabs proposed there would account for about $24.5 billion of the total investment, while the remaining 8,200 jobs and $167.6 billion would be aoolocated to Taylor.
If Samsung were to follow through on all of its plans, the earliest any facility would be up and running, according to the plans, would be 2034, and two of the plants would not be running until 2042.
The tax breaks Samsung stands to gain would be immense. If Samsung followed through on all of the plans, it would stand to save just under $4.8 billion over the lives of all of the agreements. None of the applications have received final approval from the school boards, and Samsung has reserved the right to change its plans, building the plants elsewhere, or not building them at all.
Michele Glaze, a spokesperson for Samsung, said in a statement, “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.”
Part of what motivated the filing was that the state’s Chapter 313 incentive program, which offers substantial tax breaks to companies, will expire at the end of the year. That has produced a flood of companies seeking to get approvals for projects before the program expires and will cease accepting applications.
Chapter 313 incentives allow school districts to offer substantial tax breaks to companies in return for investment in their districts that will add value in the form of jobs and other investments. The tax revenues which the local district agrees to give up in return for the investment are then made up for, with grants to the school district from the state. Critics say this offers school districts no incentives to disapprove any applications.
Previously the high number of applications per year had been 150. So far this year, as the program prepares to close, Texas has seen over 400 applications filed.
Nathan Jensen, a University of Texas professor who specializes in taxpayer-funded incentives said, “I have never seen anything like this. I think basically (companies) are treating this as just an options contract — they’re just putting (applications) in to lock in incentives in the future.”
Samsung’s current Austin operations employ about 10,000 people, made up of roughly 3,000 employees, and 7,000 contractors.
Governor Gregg Abbot hailed the potential investments by Samsung, saying, “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. 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.”
