Samsung recently confirmed a 50 per cent increased investment in its chip factory located in Taylor, Texas northeast of Austin, up from the original estimate of $17 billion to $25 billion.
This is not about any expansion of the facility. It’s about inflation taking an $8 billion toll on the original projected costs, according to a Reuters source. A second source told Reuters the final cost could be fluid.
“The newly estimated cost could go up even more if the construction of the Taylor plant gets delayed. The later the plant is completed, the higher cost we would be looking at.”
Samsung Electronics first announced its plans in 2021 and tapped Mississippi-based Yates Construction to build the $17 billion plant in time to produce chips before the 2026 federal tax grants deadline.
The 1,200-acre project is expected to cover six-million-square-feet when completed.
At the same time, new investment announcements have come from Samsung concerning additional facilities.
In March, Samsung filed preliminary plans with the Texas Department of Licensing and Regulation (TDLR) to build 230,000-square-feet of additional warehouse space near Taylor, at an estimated cost of nearly $110 million.
Looking to the future, therealdeal.com reports Samsung is considering spending up to $200 billion on chip plants in Texas over the coming decades. Part of that may be covered by previous TDLR filings that include two fabrication plants at a total cost of about $1.2 billion, a $150 million corporate office spanning 350,0000-square-feet and a $15 million parking garage.
The company has also added more than 33,000-square-feet of office space to its 340,000-square-foot presence in the Dallas-Fort Worth area, in addition to 200,000-square-feet of additional warehouse space north of the DFW airport.
Samsung has publicly spoken about “bringing new jobs and valuable training opportunities” to the Taylor area, and “contributing to the development of the local community.”
That is beginning to appear in Taylor in the form of new housing.
A 56-acre residential and commercial project down the road from the plant has been announced by Austin-based developer Texas Multifamily Capital LLC (TMC). Conceptual plans show what a representative for TMC described in a letter to the city of Taylor as, “small pods of light/neighbourhood commercial across from the (Taylor) high school with high density conventional multifamily and medium density single-family detached along an internal collector.”
Other economic spinoffs taking shape involve the purchase by a Korean supplier to Samsung of a 40,000-square-foot warehouse in Balstrop, about 35 miles south of Taylor, according to information supplied by Sylvia Carrillo, Bastrop city manager and interim director of the Bastrop Economic Development Corp.
The company, recently identified as electrical power equipment manufacturer and distributor LS Electric Co. Ltd., will provide parts for Samsung’s manufacturing facility in Taylor.
Some local officials believe up to 200 suppliers will set up base near Samsung’s factory in the future. Companies that have already announced plans include industrial gas supplier Linde, stainless steel piping company Valex Corp. and KoMiCo Technology Inc., a semiconductor equipment servicing company.
Further bolstering the state’s attempt to lure future semiconductor investment is the recent signing of House Bill 5174 known as the Texas CHIPS Act, supported by both political parties. Bill 5174 directs $700 million towards the industry through the newly-formed Texas Semiconductor Innovation Consortium involving several state universities and colleges, and the Texas Semiconductor Innovation Fund which will provide grants to companies that invest in the state.
Texas Gov. Greg Abbott proclaimed at the House Bill’s signing ceremony on June 8 that, “Texas ranks No. 1 in the United States for semiconductor manufacturing and for the expansion of the semiconductor industry.”
Bill 5174 will help Texas target investment from the National Semiconductor Technology Center (NSTT), hoping to land a big part of the $11 billion project created through the federal CHIPS Act to develop U.S. semiconductor innovation.
“There is a need for a systems-level research and development approach that connects sophisticated tools, resources and facilities,” the federal government website says.
The National Semiconductor Center “provides innovators with the flexibility to explore improvements to complex heterogeneous systems and the confidence that new designs and manufacturing technologies will be successful.”
However, competition among U.S. states will be intense for the NSTT investment. Undaunted, U.S. Senator Ted Cruz reiterated his position in a Dallas Business Journal interview that Texas should be the major hub for the Center. Cruz said he will be an avid booster for the Center to be built in Texas, but would not play favourites in terms of location within the state.
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