Samsung wants $1 billion tax incentive for new Austin plant that would create 1,800 jobs - Austin American-Statesman

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Kara Carlson ,  Bob Sechler   | Austin American-Statesman

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Samsung is seeking a taxpayer-subsidized incentives package worth more than $1 billion to choose Austin for its next big facility – a 7 million square-feet next-generation chip fabrication plant that would be valued at more than $17 billion and create 1,800 jobs, according to documents filed with the state. 

Documents made public by the Texas Comptroller's office on Thursday show that Samsung is seeking tax abatements from Travis County, the city of Austin and the Manor school district.  Samsung is also seeking an incentive deal from the state's Texas Enterprise Fund, according to the documents.

The documents indicate Samsung is seeking a 100% tax abatement over 20 years from Travis County, which would be worth $718.3 million, according to the documents filed with the state.  Travis County spokesman Hector Nieto said the county has not received a formal application from Samsung. He declined to comment further.

The tech giant is also seeking tax abatements from the city of Austin that would be worth $87.2 million over five years, according to the documents filed with the state.

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In addition, Samsung is seeking  a Chapter 313 incentive agreement with the Manor school district. That refers to Chapter 313 of the Texas Tax Code, which allows school districts to grant property tax breaks for economic development projects. The state is then required to repay the school district for the amount of property tax it gives up in the agreement. The proposed agreement calls for saving Samsung $252.9 million in taxes to the school district. 

The proposed new facility projects an initial average annual wage of $66,254 for its employees. The facility could have a local economic impact of $8.6 billion over its first 20 years of operation, according to documents filed with the state. 

Austin is already home to Samsung’s largest operation outside of its South Korea headquarters. Landing the new facility would add to a recent string of stunning economic development wins for Austin, which in the past six months has seen Tesla start work on a $1 billion assembly facility locally and tech giant Oracle formally move its corporate headquarters to Central Texas.

If Samsung chose Austin, work would start on the new facility as early as the second quarter of this year, with a planned completion date by the end of 2023, according to documents file the Texas Comptroller's office.

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Samsung is also considering incentives offers from New York, Arizona and another site in Texas, according to documents filed with the state. 

"This project is highly competitive, and the company is looking at alternative sites in the U.S. including Arizona and New York, as well as abroad in Korea where Samsung Austin Semiconductor’s parent company is headquartered... 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 city and the state," Samsung said in its application. 

"Due to the higher tax cost of operating in Texas, the appraised value limitation is a determining factor. Without the appraised value limitation award, the company would likely locate the project in Arizona, New York or Korea," the company said. 

South Korea-based Samsung is one of the world's largest memory chip and smartphone makers. The company is planning to build an advanced logic chipmaking plant in the United States. The new plant is expected to be a significant step forward for Samsung's overall chipmaking capabilities. The facility would improve Samsung's ability to compete with other chipmakers, and could help it become the chipmaker of choice for companies including Apple and Advanced Micro Devices. 

Samsung previously told the American-Statesman that no decision has been made.

However, the chipmaker has already taken some steps in recent months that could indicate it is preparing for an Austin expansion.

In October, the company bought seven tracks of land totaling 257.5 acres near its existing Northeast Austin facility.  In December, the company also requested a zoning change to allow for more industrial uses on three tracts.

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The Austin City Council recently approved a plan to relocate most of the existing Samsung Boulevard, which runs alongside Samsung's current Austin facility. Documents filed with the city called for removing a section of Samsung Boulevard from East Parmer Lane just before it runs into the Pioneer Crossing subdivision. In its place, a new spur of Braker Lane would be built to route traffic from the subdivision onto the new Samsung Boulevard. 

Samsung has had operations in Austin since 1997. It has a fabrication plant in Austin, where it has previously said about 10,000 people work, of which about 3,000 are Samsung employees and the rest are contractors. Samsung also has a research and development facility project in Austin. The company has said it has invested about $17 billion in its Austin campus through the years. 

If Austin lands the Samsung expansion, it would add to a series of recent huge wins for the region's technology sector. In the past six months, Austin was chosen as the site of a $1 billion assembly factory for electric automaker Tesla, and the new headquarters for software giant Oracle.

This is a developing story. Check back for updates.

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February 05, 2021 at 02:44AM
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Samsung wants $1 billion tax incentive for new Austin plant that would create 1,800 jobs - Austin American-Statesman

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