Economic development professionals in Texas will remember this November for a long time as the month saw announcements for three record-breaking, colossal construction projects. It’s fair to call them “Texas-sized.”
First, Texas Instruments (TI) said it will build a $30 billion semiconductor fabrication plant in Sherman, which is about midway between Dallas and the Oklahoma border (an area often referred to as Texoma).
Next, Samsung Electronics, Co., Ltd., announced that it will construct a $17 billion semiconductor manufacturing facility in Taylor, which is near Austin.
Also, Tesla just revealed that its Gigafactory in Austin – where construction and interior finishing work is underway – revealed that its cost is estimated at $1.1 billion.
The announcements totaling $48.1 billion were announced in only an eight-day period, which may be a record in the world of economic development. I can speak only for myself, but I don’t recall anything of this magnitude occurring in such a short time span in any state.
Construction in Sherman will begin next year on the 300-millimeter semiconductor wafer fabrication plants (or “fabs”), where 3,000 would be employed over time. TI’s North Texas site has the potential for up to four fabs to meet demand as semiconductor growth in electronics, particularly in industrial and automotive markets, is expected to continue well into the future. Production from the first new fab is expected as early as 2025.
When it comes to Samsung, Gov. Greg Abbott said that the investment in Taylor will be the largest foreign direct investment in Texas on record, bringing the company’s total Texas investment to more than $35 billion since 1996. The new facility will produce advanced logic chips that will power next-generation devices for applications such as mobile, 5G, high-performance computing, and artificial intelligence. Samsung’s project will create more than 2,000 jobs, thousands of indirect jobs, and a minimum of 6,500 construction jobs. Construction will begin in early 2022 with a target production start in the second half of 2024.
The Texas manufacturing facilities will strengthen the domestic semiconductor supply chain, and considering international events and the worldwide chip shortage, that is a very good thing. Worried manufacturers in many industries suffering from a chip shortage wish the projects could be accelerated.
Not included in the above capital investment total is other recent activity in the Dallas-area communities of Richardson, McKinney and Plano, activity that amounts to more than $3.2 billion in capital expenditures.
Last year, TI announced $850 million in construction for a semiconductor plant in Richardson. When complete, the plant will represent a $3.1 billion investment and will produce the company’s next-generation 300-millimeter wafers, which are more cost-effective because they can yield twice as many chips.
In September, Raytheon Intelligence & Space (RI&S), opened a new intelligent manufacturing center in McKinney and announced plans to build a new facility as part of the company’s real estate modernization and consolidation efforts. The center is a result of a $100 million investment that included a commitment to generate 500 skilled jobs, which is already complete. Further expansion by 2025 will generate another 700 jobs.
Finally, In October, Samsung said it’s investing $11 million to once again grow its Plano regional office.
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Vranich is a co-author of the recent Hoover Institution report entitled, Why Company Headquarters Are Leaving California in Unprecedented Numbers (PDF), which found that the number of firms relocating their home offices out of California is running at double the rate of recent years. The report’s co-author is Lee S. Ohanian, Senior Fellow, Hoover Institution at Stanford University and Distinguished Professor of Economics, UCLA.
Joe Vranich can be reached confidentially to explore whether a relocation makes sense for your company regardless of what state you are located in. It is a no-fee, no-obligation consultation.