Samsung Electronics $4.8 billion Texas tax break approved

Construction is underway for a Samsung Electronics new chip plant in Taylor, Texas. [TAYLOR CITY]

Samsung Electronics has received approval for $4.8 billion of tax breaks in Texas for planned and proposed semiconductor plants.

The property tax abatement was passed by the Taylor Independent School District(ISD) on Dec. 5, according to Austin Business Journal.

In July, Samsung Electronics made a $167.6 billion investment proposal to the Taylor district and another $24.5 billion to the Menor Independent School District for two chip plants ahead of the expiration the Chapter 313 incentive program at the end of the year.

“Samsung is pleased with Taylor ISD's passage of the proposed Chapter 313 applications, as Samsung is constantly exploring various opportunities to strengthen our leadership in the foundry industry,” the company said in a statement. “However, no final decisions have been made; these agreements are for potential, long-term planning purposes only."

In addition to the longer-term projects, the Suwon, Gyeonggi-based company is building a $17 billion chip factory in Taylor with the two chip fabrication plants already up and running in Austin.

The chipmaker plans to custom manufacture high-performing system-on-chips in the new factory, given that existing factories primarily deal with the chips using older manufacturing processes.

Samsung Electronics is eyeing the United States in ramping its production capabilities as the U.S. government is extending tax breaks for chips produced on the U.S. soil. The location could also afford greater access to big clients like IBM, Qualcomm and Tesla.

The focus on custom-making chips, or foundry, is a big strategic shift for Samsung Electronics to ease reliance on memory chips, like dynamic random-access memory (DRAM) and NAND flash chips.

Analysts project that foundry sales beat NAND flash product sales in the third quarter for the first time in the company's history. The change came as the NAND market experienced a severe downturn in prices while foundry continued to grow.

Updates on the progress at the Taylor site are slow in coming, with most news being reported unsourced in the Korean press. The company declined to offer any further information.

TSMC held a tool-in ceremony at its North Phoenix, Arizona plant on Dec. 6 with U.S. President Joe Biden present, transferring the first batch of equipment to the factory set for opening at the end of next year.

The Taiwan-based chip company has upped investment for the site from $12 billion to $40 billion.

Intel held a groundbreaking ceremony for its plants being built in Chandler, Arizona in September 2021.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]