Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
Samsung requests US for tax benefits to build Austin plant
By Baek Byung-yeul
Samsung Electronics appears to have decided to expand its chip-manufacturing factory in Austin, Texas, as the Korean tech giant is asking the local government there to offer tax benefits in return for the building of new production lines.
Samsung Electronics' Austin branch in Texas / Captured from Samsung Electronics webpage
By Baek Byung-yeul
Reuters reported Friday that Samsung filed documents with Texas state officials, seeking tax abatements of $805.5 million over a period of 20 years from Travis County and Austin. Samsung added in the documents that the company would begin construction in the second quarter of this year and the new plant will be operational in the third quarter of 2023.
The documents also showed Samsung was looking at alternative sites for its new semiconductor production plant in the U.S. such as Arizona and New York.
The Austin plant, which runs 14-nanometer chip lines, is Samsung's sole semiconductor manufacturing base in the U.S. Customers for its contract-based chip production there include Tesla, Qualcomm and Nvidia.
Regarding the plans to increase U.S. production, a Samsung Electronics official said “nothing has been decided yet.”
“Our CFO told investors during a conference call last month that the company would be increasing strategic investments, but we are still seeking candidate areas to invest in,” the official said.
Samsung will invest $17 billion in a new semiconductor facility as it is seeking to improve its market share in contract-based chip-manufacturing. If Samsung decides to add new production lines in the U.S., the company will be able to swiftly respond to chip-making orders from its U.S. customers.
This is in line with the U.S. government's effort to boost local semiconductor production to compete with China, at a time when there is increasing demand for chips for a wider range of products. Samsung said in the documents that the new plant would create 1,800 new jobs.
Taiwan's TSMC is at the forefront of meeting the enhanced demand. The company has already announced plans to build a chip plant in Arizona this year “to enhance its partnership with the U.S. government,” adding the new factory will create over 1,600 high-tech professional jobs and thousands of indirect opportunities.