Samsung Electronics — Austin, Texas

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Building a new semiconductor foundry, or fabrication plant, is a huge, risky undertaking. These plants, which produce the integrated circuits that are at the heart of many electrical and electronic devices, require expensive equipment, are subject to wide swings in customer demand, and may become obsolete if chip-making technology requires the creation of entirely new plants. However, chip makers can be encouraged to invest in new fabrication plants, or fabs, if public authorities offer to share the risk. Typically, local communities offer competitive packages of financial and infrastructure incentives.

When Samsung Electronics indicated it intended to build a new 300-mm fab, chief rivals to have Samsung invest in their communities included New York and Texas. According to press accounts, the New York offer was larger, but Samsung ultimately decided to build its new plant in Austin, next to its existing 200-mm fab. Once complete, the 300-mm fab will be the size of nine football fields, which will make it the largest fab in the U.S. This new facility will be capable of producing the latest in flash or DRAM memory chips using design technology in the 50-nm range.

Initially, Samsung will invest $220 million in its Austin operations, which already represent an investment of $1.9 billion. Eventually, costs may run as high as $4 billion. According to Samsung, the new investment will bring greater cost competitiveness to its Austin operations. In addition, Samsung indicates it will be able to enhance customer support for the increasing local demand for memory chips.

It is estimated that the new plant will create 900 jobs. The payroll could exceed $50 million. To secure these benefits for Austin, Texas officials presented an array of incentives that totaled $233 million.

“We are thrilled that Samsung chose Austin,” said Tim Crowley, Chair of the Greater Austin Chamber and President of the Community Banking Group for Frost Bank. “Samsung has been a major economic influence in our region and clearly will continue to be one as we grow and prosper together.”

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