Austin Economy

Samsung to invest billions more in Central Texas

Austin Luxury Group|May 20, 2024
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Dubbed the “Silicon Fields” by U.S. Rep. Lloyd Doggett, D-Austin, during a White House announcement April 15, Taylor is shaping up to become the new heart of a semiconductor cluster in Central Texas.

Samsung Electronics signed a preliminary memorandum agreement with the U.S. Department of Commerce to receive $6.4 billion in direct funding, while the company is expected to invest more than $45 billion into the region.

The federal funding—from the $53 billion Creating Helpful Incentives to Produce Semiconductors and Science Act signed into law in 2022—will vastly expand Samsung’s footprint in Taylor and further U.S. Department of Commerce’s goal of producing 20% of the world’s leading-edge semiconductor chips by the end of the decade, according to a statement from the White House.

What’s happening?

Samsung’s new 4 million-square-foot semiconductor manufacturing plant is under construction on just over 1,200 acres in Taylor. With the help of CHIPS funding, plans for the site now include a second fabrication facility, a research and development center and an advanced packaging facility. Samsung will also use the funding for a facility expansion in Austin.

“This is the epicenter of the technology revolution, the likes of which we have not seen since the Manhattan Project,” U.S. Rep. Michael McCaul, R-Austin, said during the announcement, comparing the site to the location where the atomic bomb was developed.

This agreement brings Samsung's total local investment to more than double what was initially committed by the company when the project in Taylor was first announced. In 2021, Samsung said it would invest more than $17 billion in the Taylor plant and today, the project stands to total at least $45 billion.

The investment will be transformative for the entire region surrounding the Taylor plant, federal officials said, adding that more than two dozen suppliers have already committed to coming to the area to support the semiconductor industry.

An early indication of the Samsung effect, iMarket America—a South Korea-based industrial maintenance and repair company—recently selected Round Rock as the location for its American headquarters. Additionally, the company purchased a 200-acre plot of land in Taylor for its maintenance services.

iMarket America Vice President Incheol Kim said the company followed Samsung to Williamson County. Round Rock is a great environment for business because of its large pool of potential employees, he said.

“I can just say the best part about it is all the jobs we’re creating for Americans in the process—good-paying, family-supporting jobs,” U.S. Secretary of Commerce Gina Raimondo said.

Samsung's project specifications include:

  • Location: Taylor, TX
  • CHIPS Act incentive: $6.4 billion in federal grants
  • Project investment: $45 billion
  • Project size: 1,268 acres
  • Project scope: 2 new fabrication plants, 1 new research and development fab, 1 new advanced packaging facility

The framework

Since the 1990s, the percentage of semiconductors, or chips, produced in the U.S. has decreased. A bipartisan initiative, the CHIPS and Science Act was introduced to address this heavy reliance on foreign manufacturing.

“From where I sit as the Chairman of the Foreign Affairs Committee, this is vitally important to our national security,” McCaul said. “The reason I introduced [this bill] was to pull the supply chain out of Taiwan, which controls 90% of the advanced semiconductor manufacturing, and bring it here to the United States.”

The CHIPS and Science Act is a bipartisan piece of legislation aimed at bolstering American semiconductor manufacturing and research by providing funding to tech companies.

Being able to produce this level of cutting-edge technology within America is more important than ever, Riamondo said, highlighting the rapidly increasing demand for artificial intelligence, high-performance computing and 5G communications.

Advancements in semiconductor technology have enabled the chips found in today’s smartphones to surpass the processing power of computers used by NASA to land a man on the moon in 1969, according to the Semiconductor Industry Association.

Samsung’s plan to build a research and development facility in Taylor will enable them to begin production of 2-nanometer chips, the latest advancement in chip technology. The smaller transistors on chips result in lower energy consumption and higher speeds, according to industry experts.

“All of that is how we put a stake in the ground and we tell the world that America cares about semiconductor manufacturing,” said Arati Prabhakar, Director of the White House Office of Science and Technology Policy. “That commitment by America is why Samsung is growing right here in Central Texas... The investments that come from this CHIPS Act are not just about winning today, they're also about winning tomorrow.”

The impact

Described by county leaders as one of the largest economic development projects in U.S. history, Samsung's proposed investment will support over 20,000 direct and indirect jobs in the region, according to a statement from the White House.

“Prior to Samsung, the largest economic development project in Williamson County was the Apple campus and that was $1 billion dollars,” Precinct 4 Williamson County Commissioner Russ Boles said after the announcement.

The county currently has an appraisal value of $110 billion, Boles said, noting the combined Samsung and federal investment contributes to over $45 billion invested directly into Williamson County.

Boles said Samsung's presence within the county is deeply intertwined with both the company’s and the county’s identity. The relationship between these private and public entities is a result of mutual support, shared values and a sense of belonging, he said.

In partnership with Samsung’s commitment to workforce development, the region’s concentration of higher education and training initiatives provide the area’s residents more job opportunities and higher wages.

With the recent federal stimulation to semiconductor production in the U.S., the county is expected to see a 25% increase in demand for both technicians without four-year degrees and highly educated engineers by 2030, according to the SIA.

Samsung has also had long-standing relationships with local higher education institutions, such as Austin Community College, The University of Texas and Texas State Technical College’s Hutto campus.

Laura Marmolejo, ACC associate dean of advanced manufacturing, said the school’s regional manufacturing program is geared to fill gaps in the workforce. Over the last several years, ACC has worked closely with Samsung to develop specific curriculum and certification programs tailored for the specific needs of the company.

ACC’s advanced manufacturing program provides a pathway from entry-level to advanced-research positions, with both credit and noncredit courses offered. The increased investment expected from Samsung will enable ACC’s advanced manufacturing program to broaden its scope, allowing for more hands-on experience, Marmelejo said.

“The biggest challenge is getting the students. We have a huge community in the Austin area, but I think people don't really know what semiconductors are and students don't know that the industry is really exciting nowadays,” Marmolejo said.

Marmolejo added that apprenticeship programs are more common within the semiconductor industry. “Earning while learning,” is important for today’s students, she said.

Samsung has been running an internship program with Taylor ISD since 2022.

Based on the result announcement, Samsung is expected to create a number of jobs, both directly and indirectly:
  • 21,500 total jobs
  • 17,000 construction
  • 4,500 manufacturing
Looking ahead

Once at the forefront of economic activity in the county as a railroad town, Taylor again finds itself at the precipice of economic and technological advancement, Taylor Mayor Brandt Rydell said, adding Samsung is the new “economic engine” for the city.

“Now with Samsung, we're poised to become a real global player in the world of semiconductors. It’s going to put Taylor on a trajectory that I don’t think I have a full appreciation for how it will play out,” Rydell said.

Cheney Gamboa, executive director of Hutto's economic development corporation, said several supplier companies are expressing interest in land near Taylor in Hutto—something she calls the “ripple effect.” She raised concerns over the potential challenges associated with accommodating the growth these companies may bring.

“We all get real starry-eyed about Samsung itself, but when we're talking about creating a support system, it goes beyond having supplier companies. ... We really need to make sure that we're considering the workforce,” Gamboa said. “... All those people are going to need places to live; their kids are going to need schools; and they're going to need things to do for family activities, and shopping, and dining and entertainment. I think the opportunities are just boundless.”

Mick Hawton, chief strategy officer of a commercial real estate firm in Georgetown, said announcements like this usually create an uptick in real estate activity. However, he explained the market is transitioning into the next phase of the Samsung effect in which companies already doing business with Samsung are now following, which tends to be a slower process.

Hawton said infrastructure will be the most pressing obstacle that will need to be navigated by both municipalities and private developers.

“How do all these parties come together to work together around those questions [of utilities]? Because those [questions] are going to have to be answered for development to continue to happen,” Hawton said. “There's going to be this kind of ongoing effect of workforce and opportunity, and the infrastructure that supports all of that is going to have to continue to be managed and addressed, and be intentional about it.”

Original Article by: Haley McLeod