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Site near Taylor competing with Austin to land $17 billion Samsung fab, documents show

Kara Carlson
Austin American-Statesman
Samsung is considering a site in Austin, next to where it has this plant, and a site near Taylor as potential locations for a $17 billion chipmaking facility.

A site near Taylor is competing with Austin to land Samsung's $17 billion new chipmaking facility, and the Taylor school district is considering an incentive deal that could give the tech giant a $314 million tax break over 10 years, according to new documents filed with the state Thursday.

Filings with the Texas comptroller's office earlier this year showed that Samsung was seeking more than $1 billion in incentive agreements from several Travis County taxing entities to build the facility — which the company says will create 1,800 jobs — on a site next to its existing Austin operations.

But the new filing — a proposed incentive agreement between Samsung and the Taylor Independent School District — confirms that a Williamson County site is also in the running. That had been reported earlier by several media outlets, but Samsung had declined to confirm it. Thursday's filing does not give the specific location of the property, other than that it is near Taylor.

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Samsung is also considering two locations in Arizona — near Goodyear and Queens Creek — and a site in Genessee County, N.Y. Samsung is negotiating with all three of those potential sites as well, according to the filings. The company said it is evaluating locations for access to talent, the existing semiconductor manufacturing ecosystem, speed to market and strong public-private partnerships.

Samsung's new fabrication facility is expected to be the company's most advanced to date and would expand Samsung's ability to compete with other chipmakers.

'No decision has been made'

Samsung spokesperson Michele Glaze said Thursday that no decision has been made on where to build the facility.

"As Samsung plans to invest in expanding its foundry capabilities in the U.S., we are continuing our due diligence in multiple locations for a possible future expansion," she said in a statement. "However, no decision has been made at this time. We are fortunate to have opportunities from Arizona, New York and Texas under consideration. We are taking into account various factors ranging from a strong talent pool, a semiconductor ecosystem, competitive economic development opportunities and a stable utility infrastructure."

Amber Gunst, CEO of the Austin Technology Council, said Central Texas has long had a strong relationship with Samsung, and she hopes to see the company choose one of the local sites. 

"The relationship Central Texas has with Samsung continues to be one of our strongest alliances in tech and manufacturing. The jobs they have brought to our region have changed so many lives for the better," Gunst said. "I am hopeful to see this relationship continue to grow."

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Austin already is home to Samsung’s largest operation outside of its South Korea headquarters and its only U.S. manufacturing facility. The company has said about 10,000 people work at its main Austin facility, of which 3,000 are Samsung employees and the rest are contractors. Samsung also has a research and development facility in Austin.

"Because of its strong ties to the local community and the successful past 25 years of manufacturing in Texas, Samsung Austin Semiconductor would like to continue to invest in the region and state," Samsung said in the Thursday filing. 

The proposed 10-year agreement with the Taylor school district would cap the value of Samsung’s plant and property at $80 million for the purposes of computing the maintenance and operations portion of its school taxes. For instance, Samsung estimates that its facility will have a market value of $4.35 billion in the sixth year of the deal, but the property still would be assessed at only $80 million for maintenance and operations taxes to the Taylor school district.

The tax break for Samsung could add up to $44 million in the sixth year alone. Cumulatively, it could add up to $314.1 million over 10 years.

The proposed incentive deal — which has not yet been approved by the Taylor school board or accepted by Samsung — is a Chapter 313 agreement. Chapter 313 refers to the section of the Texas tax code that allows school districts to grant property tax breaks for economic development projects. 

The company is also seeking tax rebates under Chapter 380 and 381 and assistance from the Texas Enterprise Fund, the filing said. It said it would be pursuing incentives related to infrastructure and utility improvements, rate reductions and other noncash benefits to support construction and operation of the site. 

'The potential value is extraordinary'

Industry analysts told the American-Statesman last week that Central Texas is a strong contender for Samsung's new facility.

A new Central Texas facility would build on the region's strong tech manufacturing industry, including fabs run by NXP Semiconductor and Infineon. The Austin Regional Manufacturers Association says about a quarter of all manufacturing output in the region comes from semiconductor companies.

Ed Latson, the manufacturing association's executive director, said it isn't surprising that Samsung is considering Taylor. He said it's critical for the region's future that either Austin or Taylor land the new Samsung plant.

"The investment from Samsung is unprecedented, and the potential value is extraordinary to all of us," he said. "It will drive billions of dollars of salaries and economic development into the region, be a huge cash stream for local schools and keep our semiconductor sector on the leading edge of technology." 

Tia Stone, president and CEO of the Taylor Chamber of Commerce, said that if Taylor landed the Samsung facility, the project would bring more resources to the school district and help expand the community.

Stone said she thinks Samsung and its employees would feel welcomed into the smaller community.

"It's a great community where you walk in, whether it's to the grocery store or the Texas Beer Co., and you know the people who are there," she said. "There's comfort in that, and there's a great supportive community." 

Travis County incentives

Samsung already has been pursuing incentives that could total $1 billion in Travis County, according to documents filed with the state that show the tech giant is seeking tax abatements from Travis County, the city of Austin and the Manor school district, as well as incentives from the Texas Enterprise Fund. 

Yoojin Cho, a spokesperson for Travis County, confirmed Thursday that Samsung has submitted an application for an economic development agreement with the county. On Tuesday, the Travis County Commissioners Court is scheduled to receive a briefing on the project's application.

“Travis County can confirm Samsung Austin Semiconductor has submitted an Economic Development Performance Agreement application for Project Silicon Silver. The Travis County Commissioners Court looks forward to evaluating the application and working to ensure any potential agreement with the company benefits the Travis County community in a fair and equitable manner,” Cho said in a statement.

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In February, documents filed with the state showed that Samsung planned to seek an 85% tax abatement from Travis County over 20 years that could be worth $610.5 million. From the city of Austin, Samsung said it planned to seek an 85% tax abatement that could be worth $872.5 million over 20 years. From the Manor school district, the company is considering a Chapter 313 agreement that could equate to $252.9 million in tax savings.

The incentive filings also showed the expansion could create 1,800 jobs, and Samsung is proposing an initial average wage of $66,254 for employees.  It estimated the facility could have a local economic impact of $8.6 billion over its first 20 years of operation.

Samsung's decision on a site for the fab could still be months away, as the agreements work through the various states. It also remains to be seen whether grid stability issues could hurt either of the Central Texas sites' chances. Samsung was one of a number of the city's large industrial power users that was ordered to idle or shut down amid February's freeze, as millions of Texas homes and businesses lost electricity and the state's power grid came close to shutting down. 

American-Statesman staffers Bob Sechler and Andrea Klick contributed to this report.