Billions going into semiconductor manufacturing in central Texas

(The Center Square) – Billions of federal tax dollars are being funneled into semiconductor manufacturing in central Texas after new federal and state laws have gone into effect.

The U.S. Department of Commerce announced this week that $6.4 billion was being directed to semiconductor manufacturing at Samsung Electronics facilities in Taylor and Austin, Texas.

Gov. Greg Abbott on Tuesday met with Samsung Electronics, Co., Ltd. President and CEO Kye Hyun Kyung and other executives to discuss Samsung’s historic investment of more than $40 billion in the state – on top of the federal infusion of funds.

They met after Samsung Electronics and the U.S. Department of Commerce recently signed a non-binding preliminary memorandum of terms to provide up to $6.4 billion in direct funding under the CHIPS and Science Act. Funding will go to “strengthen the resilience of the U.S. semiconductor supply chain, advance U.S. technology leadership, and fuel U.S. global competitiveness,” the department said.

The proposed investment “would turn Samsung’s existing presence in Texas into a comprehensive ecosystem for the development and production of leading-edge chips in the United States,” helping to propel the U.S. “to produce roughly 20% of the world’s leading-edge logic chips by 2030,” the department said.

U.S. Secretary of Commerce Gina Raimondo said investments like this one “will be a catalyst for continued private sector investments to help secure the long-term stability we need to put America at the beginning of our semiconductor supply chain and to safeguard a strong resilient ecosystem here at home. The chips that Samsung will be making in Texas are important components to our most advanced technologies, from artificial intelligence to high-performance computing and 5G communications.”

The proposed funding is expected to create more than 17,000 construction jobs initially and 4,500 manufacturing jobs over the next five years in Taylor and Austin.

In addition to receiving $6.4 billion in taxpayer funds, Samsung is also receiving a Treasury Department Investment Tax Credit to cover up to 25% of its qualified capital expenditures.

In 2021, Samsung first announced it was investing $17 billion in a new facility in Taylor, Texas, to build semiconductors and microchips. Two years later, it said it could potentially add 11 additional semiconductor manufacturing facilities in Taylor and Austin. Now, it’s adding a second chip-manufacturing fab, an advanced packaging facility, and a research and development center, more than doubling its initial investment in Taylor.

“We are now building on that initial investment to make Texas the premier semiconductor hub in America,” Abbott said. “The future is full of microchips, and we’re proud that some of the world’s most advanced chips will be made in Texas.”

Last year, Abbott signed the Texas CHIPS Act into law, saying, “Texas ranks number 1 in the United States for semiconductor manufacturing for the expansion of the semiconductor industry.” Texas’ new law will “bolster Texas’ position nationally and internationally when it comes to semiconductors,” he said.

He also recently announced a new Texas Semiconductor Innovation Consortium Executive Committee that was launched to work with industry stakeholders.

Texas leads in new chip manufacturing, having become a powerhouse attracting new businesses with more than 43,000 Texans currently working in the semiconductor industry.

In 2022, Texas Instruments broke ground on a new semiconductor plant in Sherman, Texas, announcing a $30 billion investment to expand its manufacturing capability long term. It was the largest private-sector economic investment in Texas history.

Also in 2022, Taiwan-based GlobalWafers Co. announced its plan to build a new 300-millimeter silicon wafer factory in Sherman to minimize a U.S. semiconductor supply chain resiliency issue.

This year, Texas will have led the U.S. for 13 consecutive years in the export of semiconductors and other electronic components, according to the Texas Economic Development & Tourism Office.