Samsung Offered Large Tax Breaks To Build Chip Factory In Texas

A city in Texas is pulling out all the stops in an effort to convince Samsung Electronics to build a $17 billion chip factory in its location.

It comes after Samsung in March this year considered four locations in the United States in which to build a brand new multi-billion dollar chip factory.

Samsung is said to be considering potential sites in Arizona, Texas and New York to build the US factory, but the city of Taylor in Texas is hoping its generous tax incentive will sway the decision in its favour.

Tax breaks

The new Samsung facility will apparently produce “advanced logic devices” for Samsung’s chip contract manufacturing business, and could create 1,800 jobs, which will be a tempting prospect for many state officials.

Samsung it should be remembered already has a chip plant in Austin, Texas, which was knocked offline for a number of weeks earlier this year, after the severe winter storm in Texas caused widespread electricity and water shortages.

But this week Reuters reported that the city of Taylor, located about 25 miles (40 kilometres) from Austin, is the one of two locations that Samsung in the Lone Star state that Samsung is considering (the second location is Austin itself).

Reuters reported that Taylor plans to offer extensive property tax breaks if it is chosen by the South Korean tech giant.

Reuters, citing a proposed resolution posted on the city’s website, reported that for the land Samsung would use, it would be offered a grant equivalent to 92.5 percent of assessed property tax for 10 years, 90 percent for the following 10 years, and then 85 percent in the 10 years after that.

Other measures include a 92.5 percent tax waiver on new property built on the site for 10 years and the repayment of development review costs, Reuters reported.

The proposed resolution will be considered on Wednesday by the Taylor City Council and Williamson County Commissioners.

Local incentives

It should be noted that other potential sites for the Samsung factory have yet to disclose their planned tax breaks.

Although it would be fair to expect that other locations will also offer property tax abatement and significant grants and/or refundable tax credits.

Offering incentives to build facilities in certain locations is an established practice in the US and elsewhere.

The previous Trump administration had encouraged chip firms to build factories in the United States.

TSMC, after talks with the former President, announced in May 2020 that it planned to build a $12 billion factory in Arizona.

The Taylor site is said to about 1,187.5 acres (4.81 square kilometres) in size, much bigger than the Austin site.

Samsung last year purchased more than 250 acres in Austin, which is in addition to 350 acres it owns that includes its sole US chip factory.

If Samsung decides on Taylor, it plans to break ground by the first quarter of next year with production due to start by end-2024, a document previously filed with Texas state officials has reportedly revealed.