Samsung Chooses Central Texas Again
By: Scott Francis
Tags: Austin, Samsung, Economic Development, Microchip

The headline: Samsung’s $17B plant is landing in Taylor, Texas

The big tech news over the last week in Austin, is that Samsung has officially chosen Taylor, Texas, just outside of Austin, as the home for their next chipmaking factory — a whopping $17B capital investment. For comparison, Tesla’s Gigafactory is estimated to be a $1B investment.

The Wall Street Journal broke the news, but as it is behind a paywall, here’s a link to the Austin Business Journal article and the Reuters article on the same subject. Rumors of the choice had been spreading for weeks because of Taylor’s very public approvals of incentive packages, and because of a lack of similar announcements from other municipalities who were certainly in the running. Moreover, the proximity to Samsung’s existing chip fabrication facility in Austin (less than one hour away) seems like a real benefit over time from a logistics and management perspective.

1200 acres and 6 million square feet of factory will go into the project, with a ground breaking scheduled in 2022.

It is one of the largest economic development projects to ever land in the Austin metro, in terms of dollar investment, and by far the biggest project to ever land in Taylor. The factory will be transformative for the Williamson County city, which had a population of 16,267 in 2020, according to U.S. Census Bureau data.

The investment has obvious implications for Samsung’s competition with Taiwan Semiconductor, but also for producing the most advanced chips in the United States. Chip factories are not terribly labor intensive — and therefore labor costs are not a significant factor in where these investments should be sited. It is more a factor of regulatory regimes, taxes, incentives, skills in the area, and logistics.

The Austin American-Statesman also covered the news:

Once considered a longshot to be chosen for Samsung’s next-generation chip fabrication plant that is expected to employ 1,800 people, Taylor had climbed into the favorites role in recent months — in part due to Williamson County government officials’ willingness to offer significant tax breaks to Samsung.

What does this mean for Taylor?

First, I think we should acknowledge the leadership shown by the Williamson County judge, Bill Gravell, and others from Taylor involved in putting their best foot forward with Samsung. The story, outlined best by the Austin Business Journal, has echoes of how the founders of Austin’s tech scene attracted MCC and Rematch to Austin (I recall Pike Powers saying that the Governor had told him “I want to win. And I don’t want to win by a little bit, I want to win by a mile.” — clear, concise direction with authority to act).

“From the very first day, I said, ‘We don’t say ‘no.’ We always work toward ‘yes,’” Gravell said. “That doesn’t mean you give away everything. It just meant every problem has a solution.”

The article goes on to describe how Taylor addressed the water and electrical utility needs, as well as roadways. It’s impressive to see local government react so quickly.

Taylor’s population is about 16,000+. That means at 17 billion dollars, we’re talking about an investment of about $1B per 1000 people. It’s massive. It will definitely have a positive effect on the local economy for years to come. I can’t imagine what a boon this will be for local restaurants, landowners, construction workers, etc. And yet it will also mean challenges to long-term residents who might prefer for Taylor to stay a quiet town and not be ground zero for the next generation of advanced chip manufacturing!

I will say, Samsung also knows how to be a great member of the community. I recall when they announced an expansion to their facility in Austin years ago — a $6B investment if I recall correctly — and they made the rounds to various chambers of commerce to talk about how proud they were to be doing business here with “us” (Austin), and then they went further and partnered with local institutions for job training and development and education.

One can’t help but notice that Tesla has moved to Austin as well, and wonder if they will be a Samsung customer for chips in the near future. Time will tell.

What is it about Austin?

One thing people are likely wondering — what is it about the Austin area that draws these investments in chipmaking?

And for that, we have to reach back into history a bit. First off, when the early leaders of Austin’s business community, in the 1960’s and 70’s, managed to attract MCC and Sematech to Austin. They also attracted IBM, Motorola, AMD, Intel, and others. In more recent years, Austin has emerged as not just a place to make the chips, but a place to design them.

Initially chip design operations were branches of large parent companies — just like the fabrication facilities. But over time, homegrown chip design firms have taken up the banner: Cirrus Logic, and Silicon Labs, and Broadcom, to name a few. Why did Austin have this resurgence in chip design — and long-term success with it — when so much of the design work has left the US?

One theory is that in addition to designing CPUs for firms like AMD and Intel, Austin also excelled at mixed-signal processor design. Analog-to-digital conversion is a key design topic for chips that go into cars, radios, cellular modems, etc. And in the early days of Austin tech, likely those design tasks were given to Austin operations because they were seen as less important…

Fast forward to the mid 2010’s and was anything more important than the mixed-signal processing designs going into cell phones? Austin has benefited from that expertise — and also on the expertise in low-power chip design.

I think in Austin you have a nice combination of skills and companies:

And it is an “it” city where you can draw new talent because Austin is also a great place for:

Quality of life

Job opportunities

Entrepreneurial opportunities

Raising money for early stage companies

A Live music scene and lively arts scene

Outdoor activities year ‘round

Positive population growth dynamics

It’s been amazing to watch the momentum over the last 25 years. Congratulations to Taylor on the win!