Texas offers tax breaks for Samsung's $17bn gigafactory

by

The city of Taylor, in Texas, has offered Samsung significant property tax cuts should the South Korean tech giant chose to build its $17 billion chip factory there.

Taylor is one of two places within the state currently up for consideration by Samsung, alongside Austin for the plant, which is expected to create around 1,800 new jobs and help the US increase domestic chip production in the wake of the semiconductor shortage.

Read more: Samsung considering 4 US sites for $17b chip plant

Taylor City Council and Williamson County Commissioners are expected to convene on Wednesday to discuss incentives for the project, which currently stands as one of the UK's largest domestic investments.

If approved, it will be Samsung's second chip factory located in Texas. The company already operates an existing chip factory in Austin.

Currently on the agenda are the tech giant to be offered a grant worth 92.3% of assessed property tax for the first 10 years, dropping to 90% for the following 10 years and to 85% in the 10 years after that, as well as a waiver for any new property built on the site for the first 10 years of its lifecycle.

This marks the furthest Samsung has progressed in its hunt for a home for the chip plant since the news broke earlier this year.

Other benefits include the fact that the proposed Taylor site is far larger than the Austin site, clocking in at around 1,187 acres (4.81 square miles).

In comparison, the current Austin site sits at around 350 acres, with an additional 250 acres purchased last year.

Whichever site is chosen, the company expects to begin construction within the first quarter of 2022, with production expected to start sometime in 2024.

The planned new site dwarfs Tesla's $1.1 billion gigafactory in Texas.

However, the green automaker commenced construction for what it considers to be "the largest" battery gigafactory in the world - with a mammoth expected output of 250GW annually.

All of this is expected to allow the US to increase domestic chip production as the world continues to struggle through the semiconductor shortage.

Current estimates suggest the semiconductor shortage could last into 2023, causing pitfalls for both the automotive and electronics sectors.

Read more: VNC chief warns semiconductor shortage may outlast Covid

A number of US-based tech giants have offered to help tackle the crisis by shifting aspects of production to manufacturing chips. For example, Intel has recently offered $20 billion in funding to the EU to help the bloc build battery gigafactories in line with the Union's plans to increase domestic production of semiconductors by 2030.

Both Intel and its main rival Nvidia have already pledged to increase the production of chips ahead of US President Joe Biden's plea for CEOs and companies to do something to address the shortages.

Samsung revealed in August about its plans to invest roughly $200 billion to help it recover from both the Covid-19 pandemic and the chip shortage, including plans to push into the biopharmaceutical sector and robotics. This investment is separate from the current fund into the new US gigafactory.

Back to Homepage

Back to Technology & Innovation

Back to Consumer Goods