Samsung Electronics “I will build a new semiconductor plant in Texas, so please reduce taxes by 900 billion won for 25 years”

Input 2021.02.27 21:31 | Revision 2021.02.27 21:40

Samsung Electronics (005930)Was confirmed to have proposed a tax reduction of 900 billion won for up to 25 years on condition of building a new semiconductor plant in Austin, Texas. Texas’ property tax reduction policy only guarantees up to 10 years, so it is noteworthy whether it will accept Samsung Electronics’ demand.-

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According to the industry on the 27th, Samsung Electronics submitted a 107-page letter of intent to the Texas government last month. This document contains Samsung Electronics’ investment scale, employment plans, and economic effects.

Samsung Electronics announced that it will invest a total of 17 billion dollars (about 19 trillion won) when building a new semiconductor plant in Austin. It costs $5.69 billion for buildings and land and $9.93 billion for equipment. The goal is to start construction in the second quarter of this year and start operation in the fourth quarter of 2023.

Samsung Electronics forecasts that there will be an economic effect of $8.64 billion (about 1.03 trillion won). It is predicted that about 19,800 jobs will be created in the process of a large-scale construction right away. In addition, when the factory is in operation, it is expected that 2,900 people, including 1,800 direct and 1,100 indirect employees, will have jobs over 10 years.

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Samsung Electronics, emphasizing this economic effect, requested a tax cut from Texas and Austin. The first five years will come from the City of Austin and the next twenty years from Travis County. The scale of benefits is about $85.47 million (about 900 billion won).

In the report, Samsung Electronics said, “If Texas’ high taxes are not resolved, we will consider building factories in New York, Arizona, and Korea as an alternative.”

If Texas and others do not accept the offer, they have pressured them to make new investments elsewhere. However, as large-scale factories such as Apple near Austin City are known to receive tax benefits for the first time in 10 years, the two sides are expected to compete for strength.

In particular, the recent cold wave caused a blackout in Austin, and the problem of stopping production at the local factory that Samsung Electronics had previously operated is also likely to affect whether new investments are made.

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