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TAYLOR, Texas — The scarcity of computer chips has drained the global economy, penalizing industries as diverse as automakers and medical device manufacturers, and adding to fears about high inflation.
But many states and cities in America are starting to see a silver lining: the possibility that efforts to sharply increase sawdust production in the United States are likely to lead to a busy sawdust factory in their backyards. And they’re racing to get their share of the potential explosion.
One of these towns is Taylor, a city of approximately 17,000 people, about 40 minutes’ drive northeast of Austin. The leaders here are pulling all the stops to get the $17 billion Samsung factory the company plans to build in the United States starting early next year.
The city, school district, and county plan to offer Samsung hundreds of millions of dollars in financial incentives, including tax breaks. The community also has arranged for water It will be taken by pipeline from a neighboring county to be used by the facility.
But Taylor is not alone. Officials in Arizona and Genesee County in New York are also trying to court the company. So do politicians in nearby Travis County, home to Austin, where Samsung already has a factory. Samsung said in a filing that locations in all three states are offering “solid property tax relief” and funding to build infrastructure for the facility. Congress is considering offering their own subsidies to chip manufacturers building in the United States.
No one can predict where Samsung’s factory will land. The company says it’s still weighing where to put it. The decision is expected to be announced daily.
The federal government has urged companies like Samsung, one of the world’s largest manufacturers of high-tech components, to build new plants in the US, calling it an economic and national security imperative. Intel laid the groundwork for two new plants in Arizona in September and may announce the location of its new production campus, planned by the end of the year.
It might just be a warm-up move. The Senate passed a bill this year to provide $52 billion in subsidies to chipmakers; It’s a plan backed by the Biden administration that will be Washington’s largest investment in industrial policy in decades. Parliament has not yet considered this. Nine governors said in a letter to congressional leaders that the fund “will provide a powerful new tool in our states’ economic development toolboxes.”
Even the prospect of Samsung coming to Taylor gives hope. The owners say it will bring more customers to the local brewery and the city’s quiet downtown. Parents think the factory’s cutting-edge assembly line will inspire the town’s high school students. One real estate agent said residents believe land prices will skyrocket – one real estate agent said that values have already risen on a contingency in recent months.
“Something like this could be a shot,” said Ian Davis, CEO of Texas Beer Company, which opened a tavern in downtown Taylor five years ago.
The vast majority of semiconductors are produced in Taiwan, Korea and mainland China, an industry generating nearly $450 billion in revenue by 2020. The United States controls only 12 percent of global production.
Lawmakers say the chip shortage illuminates how America’s limited role in the industry has put the country’s economy in a precarious position. Politicians also fear that China may take steps to increase its control over the global semiconductor supply, putting the United States at a technological disadvantage against a geopolitical rival that could potentially have national security implications.
But cities’ attempts to lure plants raise questions about how far communities must go and how much taxpayer money they must pay to get a share of the high-tech economy.
Chandler, Ariz., has approved up to $30 million in water and road improvements to support an Intel facility that broke ground in September. Phoenix will spend approximately $200 million on infrastructure for a new factory by Taiwan Semiconductor Manufacturing Company, another major chip manufacturer. When the company announced the facility in 2020, such subsidies It was very important to his plans.
Critics of corporate tax incentives say the money could be better spent on basic infrastructure and public schools. They say cities are wasting taxpayer funds unnecessarily, as factors such as talent and availability of natural resources are more important to chipmakers than subsidies. And they argue that cities sacrifice the most important thing a major industrial project can contribute: tax revenue.
“There are clearly benefits,” said Nathan Jensen, a professor at the University of Texas at Austin who works on subsidy programs. “The problem is if you’re literally giving a lot of these benefits to starting the company.”
Many of Taylor’s residents said that was the price they had to pay to speed up the city’s revival.
Named after a railroad manager, Taylor was once a center for the shipping of cattle and cotton. Louie Mueller Barbecue opened in 1949 and still attracts carnivores with its brisket and beef ribs.
But in recent years, residents said downtown Taylor has lost some of its vibrancy.
They sought to change that by attracting new small businesses to the city and renovating an old building that now houses Mr. Davis’ restroom, converted lofts and a cafe serving babka and chocolate tahini cakes. Another group has repurposed the town’s old high school to house small businesses, including restaurants and a pinball bar. The city spruced up a park in the city centre.
“Bringing this is something that will be here forever, the revenue it brings for our city and especially our schools will be tremendous,” said Susan Green, a Taylor resident with children in the school system.
Austin Mayor Steve Adler said that Austin’s subsidies to Samsung in the 1990s had a positive impact on the city, which has experienced rapid growth in recent years. Tesla and Oracle recently moved their corporate headquarters to Austin, and Facebook and Apple have major operations there. By one estimate, the city best site in the country for commercial real estate investment.
Austin and the surrounding county held their own talks with Samsung about the company’s planned new factory. Mr. Adler said he wanted the city to be a competitive location for the Samsung factory.
Mr. Adler said of Samsung, “Their presence here has definitely benefited our city and region a lot.” But Pat Garofalo, director of state and local policy for the American Project for Economic Freedoms, a liberal group that criticizes big tech companies, said the money would be better spent on projects that make a city attractive to a wide variety of businesses. public schools – instead of a single suitor.
He said manufacturers feel the “very real problem” of semiconductor shortages and are “using it to take advantage of the trend between state and local authorities to pay a lot of taxpayer money to house one of these facilities.”
Vanessa Fuentes, a member of the Austin City Council, said residents were worried about being kicked out of their homes or corner stores being replaced by expensive grocery stores. He said the city is “superior” in dealings with tech companies and needs to make sure any deals it makes with tech companies are adequate for current residents.
“If it’s not good enough, frankly we don’t need to,” he said. “Because there’s a lot of risk involved in what could happen with that kind of growth, especially in terms of displacement.”
At Taylor, Samsung’s supporters believe they can manage these concerns if they get the project.
“Yes, there will be more traffic. Yes, there will be some rising property values,” said Mr. Davis. “But I think it will also help create jobs.”
To sweeten the deal, Mr. Davis recently made another proposal to the chipmaker at a public meeting: A Samsung will make pale soda.
“I think 5,000 construction workers a day are bossing all these small businesses – I think the pros will outweigh the cons by a mile,” he said.
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