"Tax 90% Reduction" Push by Taylor-si... Three Key Factors in Samsung's Calculator

Unanimous Support for Tax Incentives at Joint Meeting in Taylor, Texas
Samsung Remains in 'Cautious' Mode... Negotiations with Other Candidate Sites Ongoing
Reviewing Key Factors: Tax Benefits, Stable Infrastructure, and Workforce 확보

[Asia Economy Reporters Heungsun Kim and Hyunjin Jung] Samsung Electronics is expected to see a heated final competition among candidate cities vying to attract its newly established U.S. foundry (semiconductor contract manufacturing) plant, which involves an investment of $17 billion (approximately 20 trillion KRW). The trigger was pulled when Taylor City in Texas, a leading candidate, presented specific conditions to reduce property taxes by up to 90% for the next 20 years. With a benchmark set for other candidates to offer similar or better terms, Samsung Electronics has gained an advantage by being able to compare and calculate multiple options.

Taylor City Takes the Lead, Samsung Remains ‘Cautious’

According to industry sources on the 10th, Samsung Electronics remains cautious even though Taylor City has finalized its incentive plan, including property tax rebates. This is because Samsung must consider not only tax benefits but also the infrastructure of the area where the foundry plant will be located, and because negotiations with other candidate cities are still ongoing. A semiconductor industry insider said, "It is clear that Taylor City is in a favorable position as it has formalized tax benefits and is adjacent to Austin City, where Samsung’s existing foundry plant is located," adding, "There is a high possibility that other candidate cities will offer more aggressive terms behind the scenes."

According to local Texas media, the Taylor City Council and Williamson County unanimously approved an incentive plan at a joint meeting held the previous day, offering tax reductions and other incentives if Samsung Electronics builds a foundry plant in the area. The core of the plan is that if Samsung constructs a semiconductor plant facility of at least 6 million square feet (560,000㎡) by January 31, 2026, and provides 1,800 full-time jobs, the county will refund 90% of the property taxes Samsung pays during the first 10 years and 85% during the following 10 years.

Officials from the Taylor City Council in Texas, Williamson County, and Samsung Austin Semiconductor held a joint meeting on the 8th (local time) at the Taylor Independent School District Event Center. (Photo by Taylor City)

Industry insiders view Taylor City’s plan as a measure taken transparently under Texas state regulations that require public disclosure and consent for investment attraction issues. Some speculate that the incentive plan was established based on the fact that Samsung had requested tax reductions worth up to 900 billion KRW over 20 years from another candidate, Austin City, Texas. Earlier this year, Samsung submitted a letter of intent to the Texas state government and local governments near Austin, requesting tax reductions of $805.47 million (approximately 940 billion KRW) over 20 years. Along with these areas, Arizona’s Goodyear and Queen Creek, and New York’s Genesee County are also making efforts to attract Samsung’s foundry plant, but none have proposed additional specific benefits yet.

A Samsung Electronics official said, "The details decided by Taylor City are only reference points, and nothing has been finalized regarding the candidate sites," adding, "We are still negotiating with other regions and plan to review various conditions together."

Three Key Factors That Will Decide the U.S. Investment Location

The first factor Samsung Electronics considers in establishing a new foundry plant is the tax incentive benefits provided by state and city governments. Semiconductor production facility investments are massive in scale, so reducing future costs such as taxes is crucial. In the case of semiconductors, transportation is mainly done by air, so the limitations on the country or region where production facilities are built are relatively small compared to other industries, which leads to placing more weight on local support.

The reason why various U.S. state and city governments are offering tax benefits and sending ‘love calls’ to Samsung is precisely this. Samsung also mentioned other regions such as New York and Arizona in the documents submitted to Texas, stating, "This project is highly competitive," and despite Taylor City’s recent active support announcement, Samsung’s stance of "no final decision yet" is interpreted as a negotiation strategy to extract benefits until the last moment.

Another factor Samsung is examining is infrastructure, such as water and electricity, which are essential for operating semiconductor manufacturing facilities. It is important to have a stable supply of vast amounts of industrial water and electricity to run a semiconductor plant. In February, Samsung suffered about 400 billion KRW in damages when it halted operations at its Austin plant for the first time due to an unprecedented cold wave in Texas. This led to speculation that Austin might have been eliminated as a candidate for expanding semiconductor plants. In Arizona, concerns have also been raised locally that Samsung’s investment attraction might be hindered due to the water shortage crisis in the southwestern U.S. last month.

Considering these points, Taylor City recently promised Samsung a stable supply of water and electricity. New York State’s candidate area, the Science, Technology, Advanced Manufacturing Park (STAMP) in Genesee County, is also relatively easy to secure water and electricity.

Lastly, Samsung is also considering whether it can secure skilled personnel needed for semiconductor manufacturing facilities and whether a surrounding semiconductor ecosystem is established. Austin and Taylor have about 20 universities nearby, and about half of the workforce holds college degrees, making it advantageous for talent acquisition. Also, since Samsung’s Austin plant is currently located there, the ecosystem can be continued. Arizona is expected to expand its ecosystem as major semiconductor companies like TSMC and Intel have decided to invest there, and New York is also reviewing entering the industrial park, so it is reported that there will be no difficulties in securing personnel or building a semiconductor ecosystem.

A semiconductor industry insider said, "Once Samsung decides on the investment location this time, it will make a 20 trillion KRW investment and must maintain the site for more than 20 years," adding, "They will carefully review various factors such as site, infrastructure, costs, and relationships with customers."

This content was produced with the assistance of AI translation services.