Samsung plans to invest 1,800 in Taylor, Texas

Samsung plans to invest 1,800 in Taylor, Texas

According to people familiar with the matter, Electronics Co. plans to invest in Taylor, Texas, a mega investment by the South Korean tech giant, as the administration pushes for an expansion of U.S. semiconductor production.

People familiar with the matter said that an announcement could come as early as Tuesday. Greg Abbott is scheduled to make an economic announcement on Tuesday at 5 p.m. local time.

The Taylor facility in central Texas plans to create around 1,800 jobs, though chip production isn't expected to start until the end of 2024, according to documents that were previously filed with Texas authorities. Taylor had offered incentives that include the equivalent of property-tax breaks of up to 92.5% for the first 10 years, with the write-offs gradually declining over the next several decades.

A final decision has not yet been made regarding the location, a Samsung spokeswoman said.

Samsung doubling down in Texas, where it already has a footprint, comes amid a year of historic spending for the semiconductor industry, spurred by government incentives to attract local production. A global chip shortage has hurt many industries from smartphones and home appliances to cars.

More than $205 billion will be invested over the next three years, according to Co., the world's largest semiconductor maker by revenue. Over the course of the next decade, the company plans to invest in semiconductor factories in the U.S. and Europe.

The Biden administration and Congress have set in motion legislation to provide funding to stimulate investment in the U.S. In June, the Senate approved $52 billion in direct industry subsidies for new semiconductor factories, but the House has yet to take action.

The U.S. has fallen behind in semiconductor manufacturing, accounting for only 12% of world-wide production capacity in 2020 - down from 37% in 1990, according to the Semiconductor Industry Association. China, Taiwan, and South Korea have become bigger production hubs for computer chips that lawmakers have come to see as a resource critical to national security and economic growth.

Before landing on Taylor, Samsung had previously scouted locations in Florida, New York and Arizona, according to people familiar with the process. The people said that the company had considered Austin, Texas, where Samsung has operated its sole U.S.-based chip-making plant for decades.

Taylor, a town of about 16,000 people in Williamson County, is about 30 miles from Austin. The planned site of roughly 1,200 acres is much larger than Samsung's property in Austin.

The Taylor factory is expected to serve as an advanced chip-making facility for Samsung's contract-manufacturing operations that make semiconductors designed by other firms. The semiconductor industry is investing in high-end manufacturing. The types of chips with the longest backlogs tend to be less-priced and haven't been the focus of massive expansion.

The investment from Samsung is another victory for Texas's ambitions as a tech hub. In October, Inc. said it was moving its headquarters to Austin, months after Chief Executive had moved to the Lone Star State. Intel is hiring about 1,700 people for a downtown Austin design campus.

In August, Samsung s decision on the location of its new U.S. chip plant came months from the South Korean conglomerate's de facto leader Lee Jae-yong. Mr. Lee had been in jail after being convicted of bribing South Korea's former president in exchange for government backing for a merger between two Samsung affiliates in 2015 that helped cement his ownership of the conglomerate. He was released about a year early.

Mr. Lee, 53-year-old grandson of Samsung's founder, had come with expectations for bold moves after his supporters argued that South Korea's largest business conglomerate had become indecisive in his absence. The Justice Ministry pointed out economic factors when granting parole to Mr. Lee. The decision at Samsung requires the signature of Mr. Lee.

In recent days, Mr. Lee has been on a business trip in the U.S. with Samsung sharing photos of visits with the CEOs of Inc. and Inc. Mr. Lee also met with White House officials and lawmakers as well as Chief Executive Satya Nadella, according to the company. According to a person familiar with the situation, Lee is unlikely to be in Texas for the Tuesday event.

In May, South Korean President Moon Jae-in met President Biden at the White House, where the two countries pledged greater cooperation on supply-chain issues. South Korean firms outlined their U.S. investment plans at the time.