[단독] Samsung Electronics “20 trillion US semiconductor investment…Please reduce tax for 25 years”

“The property tax cut is a determining factor in whether to invest in Texas.”

It has been confirmed that the largest variable determining whether Samsung Electronics will build a new semiconductor plant in Austin, Texas amid the global semiconductor shortage, is the state property tax reduction policy limited to’up to 10 years’.

Texas has a unique Appraised Value Limitation (AVL) that exempts all or part of real estate and property growth for up to 10 years to attract large corporations. Samsung Electronics, however, is demanding a reduction of up to 25 years, which is 2.5 times longer than this, so it is noteworthy whether the state of Texas and the city of Austin will finally allow it.

■ Maeil Economic Daily, Samsung Electronics 107 page proposal acquisition analysis

On the 27th, Maeil Economic Daily, on behalf of Samsung Electronics on the 18th of last month, obtained and analyzed a tax reduction proposal for a new investment of $1.7 billion submitted to the city by a law firm in Austin.

This proposal, which covers a total of 107 pages, covers detailed regional plans for investment in an astronomical new semiconductor plant, which is close to KRW 20 trillion, and economic effects and requests for tax reductions. Some foreign media, including Reuters, mentioned this proposal comprehensively last month.

However, if you look at the details, it is analyzed that each sector, such as construction work and job creation, will cause enormous economic effects unprecedented in the history of Austin.

First, it was found that the number of jobs generated during the large-scale construction process reached 11,873. After completion, the expected number of direct employees (1800) and indirect employees (1173) totaled 2973 as the factory began operation. The total economic effect, such as the effect of inducing local employment and increasing income, amounted to $8.64 billion (10.37 trillion won).

■ Samsung’s “Sookmyung” that has no choice but to demand excessive tax reduction

The problem is that, while predicting an unprecedented astronomical investment in Austin, the level of tax cuts required by Samsung Electronics is also unprecedented.

The reason why Samsung Electronics strongly expressed the property tax reduction limited to 10 years on page 18 of the report as a’determinant factor’ in whether to invest or not seems to be due to the specificity of the semiconductor process.

The semiconductor process entails a large initial investment and takes a considerable period of time to stabilize the yield (production efficiency). The higher the yield, the lower the cost of expenditure. Since semiconductor products are oriented towards ultra-fine processing, a huge additional investment is required every year.

In particular, Samsung Electronics has been ranked as the world’s No. 1 company in the memory semiconductor market with its `super gap` strategy, but it has hardly been able to catch up with Taiwan`s TSMC, the world`s No. 1 company in the foundry (consignment production of semiconductors). To catch up with TSMC, it is necessary to overwhelm the investment scale in ultra-fine processes and be recognized by customers for its technology.

Samsung Electronics’ Austin semiconductor plant is based on a foundry process that requires such massive additional investments to be carried out every year.

■ Austin City, Understanding’Semiconductor Specificity’ Is Key

Therefore, whether Texas, Austin, and local counties will recognize Samsung Electronics’ uniqueness will be a key variable in deciding whether to allow the first ’25-year reduction’ request.

According to the analysis of Samsung Electronics’ report by Maeil Economic Daily, an annual average of $150.6 million (180 billion won) is invested in the process for the first one to five years of operation of the new Austin plant. On the other hand, in the period between 15 and 20 years, the average annual input is $295 million (35 billion won), which is nearly doubled. This is the point that can detect the desperate need of Samsung Electronics to request an exception to the’maximum 10 years’ reduction in a situation where the scale of new investments increases with each year.

In this regard, according to local media outlets in the city of Austin, even Tesla, which is building an electric vehicle giga factory in Travis County, where Samsung Electronics’ Austin plant is located, will provide tax benefits of $68 million from local governments over the next 10 years under the “up to 10 years” regulation. It is known to receive.

In this report, Samsung Electronics announced in this report that if the 25-year exemption condition is not accepted, it will review other candidate sites in the United States, such as Arizona and New York. Other candidates include Korea.

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