The reason Samsung pulled out “20 years of property tax reduction because I will invest 19 trillion won” in Austin

There is growing interest in the’tax cut period’, a variable that will determine whether Samsung Electronics will invest additional semiconductor facilities in Austin, Texas. Austin City needs to revise its current policy to attract investment.

Samsung Electronics is weighing investments in semiconductor facilities worth 17 billion dollars (about 19 trillion won) in Austin. To this end, the city of Austin has requested a tax exemption for all or part of real estate and property growth for up to 20 years. Currently, the city of Austin provides tax cuts for up to 10 years to attract large corporations.

According to industry sources on the 28th, the tax reduction proposal for new investments submitted by Samsung Electronics to the city of Austin on the 18th (local time) contains the economic effects that the city will have, such as job creation, as well as a 20-year property tax reduction.

The total number of jobs generated by Samsung Electronics’ investment is 10,9873. After completion, the number of direct employment (1800 employees) and indirect employment (1173 employees) that will be obtained through operation of the plant is about 3,000. The economic effect that Austin will get from this is about $8.64 billion (10.39 trillion won). It is the largest investment scale ever.

For Samsung Electronics, property tax reduction is an important issue. This is because initial investment is not over due to the nature of semiconductors dealing with ultra-fine processes. In order to stabilize the yield (production efficiency), a huge investment must be continued every year, and the annual input cost increases as the equipment ages. When additional facilities invested in the Austin plant are put into operation, new investments are required for an annual average of $1506 billion (about 180 billion won) until the first five years. After 15 years, the average annual investment of $295 million (approximately 354 billion won) should be invested.

In addition, the Austin plant of Samsung Electronics is where the foundry (consignment production) production line is located. In pursuit of Taiwan’s TSMC, the world’s number one foundry market, it is necessary to secure technological advantage through large-scale investments. .

Samsung Electronics is reportedly expected to review other candidate sites such as Arizona, New York, and Korea if Austin does not accept the request for property tax reduction.

Samsung Electronics’ Austin plant, which was completed in 1996, currently has 3,000 people working. The cumulative investment amount is more than 18 billion dollars (about 18 trillion won). Its main products are the application processor (AP), which acts as the brain of a smartphone. The plant has been shutting down since the 16th as power shortages due to cold waves and heavy snowfalls that have continued since the beginning of this month.

Reporter Choi Hyun-joo [email protected]