A network of factories is popping up to serve a megafactory

With construction humming along at a new campus in Taylor, and work remaining steady at its longtime home in North Austin, Samsung Austin Semiconductor says its economic impact on Central Texas more than doubled last year.

It was already huge.

The chipmaker – part of the South Korea-based Samsung Electronics Co. Ltd. – apparently pumped $13.6 billion into the local economy at its two sites in 2022, up from $6.3 billion the year prior, while also supporting 21,000 direct and indirect jobs. That’s according to newly released research conducted on behalf of the chipmaker by Austin-based Impact DataSource LLC using information from the company, tax rates and some estimates and assumptions.

Jon Taylor, Samsung Austin’s corporate vice president of fab engineering and public affairs, in comments shared with the Austin Business Journal, said: “While this region has undergone tremendous change across the past twenty-seven years, our commitment to this community and its families is that we’ll continue to be a trusted partner for decades to come.”

Samsung was put on Austin’s map in 1996, when it broke ground on its North Austin semiconductor factory.

The report’s findings underscore the impact the company continues to have on Central Texas — and how much its impact will grow as Samsung gets closer to opening the next-generation chipmaking facility northeast of Austin next year. Once operational, the Taylor facility could pump $42 billion into the Central Texas economy alone, officials have said.

At the North Austin site, researchers said Samsung invested $18 billion in two fabrication facilities that total 2.45 million square feet of floor space. The company has more than 600 acres in land holdings at the site and has hinted that it could build it out more in the future.

At the Taylor campus. about a 20 mile drive northeast of the North Austin plant, Samsung has said the initial investment there is set to be $17 billion, although some estimates have pegged it higher due to rising construction costs. The company reported spending $2 billion on construction in 2022 alone.

The report states the initial site will include 4.7 million square feet of floor space, a fabrication plant, office space, parking garage, central utility building and special utility supply facilities that will be operational next year. The company owns about 1,200 acres and could eventually build as many as nine additional fabs on the space.

Other findings in the impact report include the following:

• At the Taylor site, the company created upward of 4,600 direct and indirect construction jobs last year. That resulted in $4.2 billion pumped into the local economy and roughly $102 million in salaries. The company has said it will create an estimated 1,800 permanent jobs over the first 10 years of operations, with initial average annual salaries of $75,168.
• The Austin site reported 4,377 direct jobs and 9,935 indirect jobs in 2022. That equates to $9.3 billion in economic impact in Central Texas, including $912.5 million in worker’s salaries. In 2022, the facility made annual operating expenditures of $5.1 billion and had salaries of $518 million. That equates to an average salary of around $118,400. About 35% of the total direct and indirect employees at the site live in Austin and roughly 52% live in Travis County.
• The company paid about $110 million in water, wastewater and electricity utilities, and about $3.9 million for natural gas at the Austin site. They also paid $1.4 billion in taxes based on land, buildings and other real property improvements and business personal property in 2022. The company said it reached the Zero Waste to Landfill Gold Level validation for recycling or reusing 97% of waste in 2022.
• Both sites generated about $184 million in taxes for the region for entities like the cities of Taylor and Austin, Travis and Williamson counties, the Taylor and Manor independent school districts and Capital Metro, among others. The majority came from the Austin site.
• The Austin plant hosts various out-of-town visitors to the facility, including corporate officials, suppliers and customers, along with vendor trucks that unload and load at the facility. Those visitors spent an estimated $6.3 million on various items in the community, including $2.1 million on lodging. Along with direct and indirect workers and spending by the facility itself, the total taxable spending in the area was $560 million.
• The company said it donated $2.5 million to 50 nonprofit organizations in Austin, Manor and Taylor. That did not include roughly $400,000 in contributions made by employees to more than 400 charities last year. The company matched $225,000 of those contributions.
• Samsung recently announced $4.2 million to community organizations including new partnerships with the University of Texas at Austin’s Cockrell School of Engineering and Texas A&M University’s College of Engineering. It’s part of an effort to develop the advanced manufacturing and STEM pipeline that also includes a paid internship program they’ve ran the last two summers with Taylor ISD.

‘Massive’ economic impact

Just how big of an impact does Samsung have on the community? Just ask its suppliers.

Many of those indirect jobs referenced above are from companies that work with Samsung to provide parts or materials to help in the chipmaking process. While many of those companies have been in the Austin area for as long as Samsung, some officials have said that hundreds of companies are likely to follow Samsung to the region to support the Taylor facility.

That’s already been the case. Other companies in the Samsung supply chain that are expanding in Central Texas include Hanyang Eng USA Inc. – a subsidiary of Hanyang ENG Co. Ltd. – which is moving its headquarters to Cedar Park; LS Electric Co. Ltd., which has purchased a big building in Bastrop; and KoMiCo Technology Inc., a semiconductor equipment parts company that plans to invest at least $30 million in an existing Round Rock facility.

Scott Lingren, managing director and U.S. chairman of Samsung supplier Schunk Xycarb Technology Inc., called Samsung’s continued expansion “massive” for many companies in Austin. They themselves are building a 140,000-square-foot site in Georgetown, where they will continue to supply Samsung and other chipmakers around the country with quartz and other mineral-ware products that are used in the semiconductor fabrication and other processes.

He said they’ll really start to see the benefit once the Samsung fab – and other big fabs around the country, like Intel Corp.’s new site in Ohio, and Taiwan Semiconductor Manufacturing Co. Ltd.’s in Arizona – are up-and-running. But he said the companies’ commitments help SXT align and work with them on long-term strategic projects. Investing now increases their capacity in the future and lessens pressure on the supply chain.

“It’s a positive thing even before they turn the lights on,” Lingren said. “Their expansion, along with others across the U.S., is just meeting the needs of the marketplace. We have to expand our production to be able to keep up with them. … It’s great. It’s one of those rising tides lifts all boats kind of things.”

Larry Smith, U.S. chairman for Tokyo Electron Ltd., which is one of the world’s largest providers of the equipment used to make microchips, said Samsung’s “expansion and economic impact has had a tremendous impact on our company” already. The company is in the process of selling its long-time Austin U.S. headquarters with a plan to better organize into a future local office space and research-and-development site.

He echoed the idea that it creates long-term stability for them, saying their expansion makes the next five-to-10 years as a market possible. Those ramifications continue to extend down what he called “a very elaborate supply chain,” making it so that impact is felt not only regionally but across the whole country.

“They fill their factories of Tokyo Electron equipment and we’re grateful for the partnership and ability to work on long-term projects,” Smith said, adding that Samsung is one of their biggest customers.

That could be critical for the years to come. Due to geopolitical tensions, and after weak spots were identified during the coronavirus pandemic, the United States has been pushing to bring manufacturing back to ensure the longevity and stability of the domestic semiconductor supply chain.

That’s the expectation Lingren has moving forward. Those tensions will make it harder and harder in the future to advance and obtain new technologies. He said having an ecosystem intact with the ability to expand means places like Austin stand to benefit.

“If anything, the expansion they’ve already planned on, they might be under-calling it,” Lingren said. “I think it might be even bigger than initially planned.”

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