Samsung mulls $17 billion Austin chip plant, seeks tax breaks

Samsung Electronics Co. is seeking tax breaks of $805.5 million from the US state of Texas in return for a new $17 billion chip plant, which the South Korean tech giant said could create 1,800 jobs over 10 years.

Samsung, the world’s biggest memory chip supplier, has been scouting sites for its new semiconductor factory in the US as it aims to close ranks with foundry industry leader Taiwan Semiconductor Manufacturing Co. (TSMC).

According to multiple foreign media outlets, the Korean chipmaker is considering Austin, Texas, as one of the most likely sites for the plant.

Citing documents filed with Texas state officials, Reuters reported on Feb. 5 that Samsung is seeking combined tax abatements of $805.5 million over 20 years from Travis County and the city of Austin. According to the Austin American-Statesman newspaper, Samsung wants $718.3 million in tax breaks from Travis County and $87.2 million from the city of Austin.

In the documents, Samsung said that if Austin is selected, the company would break ground on the site in the second quarter of this year and that the plant will become operational in the third quarter of 2023.

The company is also looking at alternative sites in the US, including Arizona and New York, as well as in Korea, according to media reports.

Samsung already has a semiconductor plant in Austin that makes computing chips.

In December last year, the company said it has purchased a giant lot of land close to its Austin plant, raising expectations that it may expand its foundry business in the US.

LOOKING TO CLOSE RANKS WITH TSMC

The current plant makes 14-nanometer, 28 nm and 32 nm products for its US clients such as Tesla Inc., Qualcomm Inc. and Nvidia Corp. Samsung posted about 3 trillion won ($2.7 billion) in revenue from the Austin plant in the first nine months of 2020.

In response to the media reports, Samsung said it is “reviewing multiple sites for the project, but nothing has been confirmed.”

Samsung has been considering building a second chip plant in the US to catch up with TSMC, which last year disclosed plans for a $12 billion chip plant in Arizona expected to come online in 2024.

In 2019, Samsung unveiled a plan to become the world's No. 1 logic chipmaker by 2030 by investing 133 trillion won to bolster its competitiveness in the system chip and foundry businesses.

Currently, Samsung is the world’s second-largest foundry player with its 2021 market share projected at 18%, lagging far behind TSMC’s estimated 54%.

Write to Jeong-Soo Hwang at hjs@hankyung.com
In-Soo Nam edited this article.