NORTH AMERICAN REPORTS
Austin Waits and Wins
After Samsung's internal committee recommendation in fall 2005 to go ahead with a 300-mm. (12-inch) chip fab investment of $3.5
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| Samsung Austin Semiconductor. |
"Samsung Austin Semiconductor is delighted that the Samsung Board of Directors has shown its faith in the Austin facility by giving us the green light to proceed in the first phase of the 12-inch fabrication plant here," said Dr. H.K. Park, president of Samsung Austin Semiconductor. "We will proceed with the building phase as quickly as possible."
The company pointed out that this investment was not part of the $5.9 billion the company had announced it would invest in 2006 in semiconductor operations. But it is part of an overall commitment to invest $33 billion in the business by 2012.
Bill Cryer, public affairs counsel for Samsung Austin, tells Site Selection that the logistics of transporting finished product to waiting planes in Dallas was among the Samsung team's concerns.
"There was some interest in all the future transportation plans for the Austin area over the next 15 to 25 years," he says, including the public-private Texas Transport Corridor tollway plans. Cryer says the City of Austin was also able to assure the company that its significant water needs could be met.
Phil Wilson, deputy chief of staff to Texas Gov. Rick Perry, describes the negotiations as a collaborative process, with teams of half a dozen from both Samsung and the state working together over the past year to find solutions to worker training, tax abatements and other factors. The project's total incentives package is valued at approximately $233 million, significantly less than what was offered by the state of New York. But something Texas had in its back pocket was the productive Samsung 200-mm. fab already on the ground.
Asked how Samsung came to pick the U.S. for this investment despite a national concern over math and science skills and the reported cost for building and operating such a plant in the U.S. being as much as $1 billion higher than other locations, Cryer says, "There are lots of reasons, but the core reason is [the company] has a fab that has been operating quite successfully for the last nine years, and has a staff that has been tested by the practical experience of running a semiconductor plant in the U.S. – using by and large U.S. engineers, but borrowing heavily from Korea – and working out the kinks."
The investment also protects the viability of that Austin complex, meaning the "yes" vote holds great promise for incremental investment over many years, whereas a "no" probably would have been the death knell for the original fab.
Wilson says another reason the company picked a U.S. location was to diversify its risk in the global economy. But he points to other intangibles beyond pure dollars.
"Here you have strong rule-of-law protections, a highly skilled work force and a supplier base," he says, also noting the University of Texas at Austin's important role. "And the people working for these companies make the difference at the end of the day. Their people don't want to move across the world to run a factory."
