Samsung Austin Semiconductor plans to invest another $1 billion in its Austin chip manufacturing facility, adding as many as 500 engineering and manufacturing jobs in Central Texas, company executives say.
The investment will help Samsung increase the capacity of its Northeast Austin manufacturing plant, where it makes chips that are used to help power mobile phones, tablets and other electronic devices.
"We're making more wafers," said Catherine Morse, general counsel and senior director of public affairs at Samsung Austin Semiconductor, which is an arm of Samsung Electronics.
The investment comes on the heels of about $4 billion Samsung spent in 2010 to upgrade the plant so that it could make more "system on chip" products instead of memory chips. The company no longer makes memory chips in Austin.
This year's $1 billion investment includes buying new manufacturing equipment and construction costs. The project is expected to be completed by mid 2017, the company said. Morse said the company will be hiring between 250 and 500 manufacturing technicians and some engineers to help run the new equipment.
"These are big investments," Morse said. "These aren't happening in every community, people lament that there are no more jobs coming to Austin but these are jobs for Austinites."
South Korea-based Samsung has had operations in Austin since 1997 and it currently employs 3,000 people here. The bulk of its Austin employees are at its manufacturing facility, also known as a fab or foundry.
That's where Samsung makes chips not just for Samsung devices but for other semiconductor companies that don't have their own manufacturing facilities.
Samsung also has a research and development center in Austin where it employs about 300 people. The company recently leased additional office space in Austin to make room for additional chip designers.
Samsung is one of the few Austin semiconductor companies that does any manufacturing here. NXP Semiconductors is another chip company that still does manufacturing in Austin.
Most of the other Austin semiconductor companies, such as Cirrus Logic, Silicon Labs, and Advanced Micro Devices, have gone "fabless," outsourcing the manufacturing work and focusing on design.
Austin's semiconductor industry accounts for about 10,000 to 15,000 jobs in Central Texas, according to economic development consultant Angelos Angelou. That's down from about 30,000 jobs two decades ago.
Some of that workforce reduction comes from closing down fabs and moving manufacturing overseas.
"Samsung seems to be the only semiconductor company (in Austin) that is actually investing considerable levels of capital to diversify their portfolio of products and adding new equipment and facilities," Angelou said. The other fabs, he said, "have not necessarily upgraded in a considerable way their manufacturing facilities in Austin."
Samsung said it is not seeking any traditional economic incentives for this plant upgrade, though it has filed an application with the city of Austin for the plant expansion to be designated an "Enterprise Zone" project.
These projects, which would be nominated by the city and approved by the state, make companies eligible for state sales and use tax refunds on qualified expenditures, such as machinery and equipment.
The city of Austin's website notes that only two of the eight Enterprise Zone projects it has nominated have been approved by the state.
In the past, Samsung has negotiated economic incentive deals for building or upgrading its Austin facilities. In 2006, Samsung reached a deal with local governments, the Manor school district and the state that was reported at the time to be worth a total of $233.4 million in tax abatements and other incentives.
Morse said Samsung is still eligible for some city property tax rebates under this incentive package, though it has already met its end of the bargain: creating 500 jobs and an investment of $4 billion. All told, Morse said Samsung has invested $16 billion in its Central Texas operations since it came here in 1997.
"Samsung has delivered on every promise it's made to this community," Morse said.
An economic impact study done by Samsung and the Austin Chamber of Commerce this year concluded that Samsung has added $3.6 billion to the Central Texas economy in 2015, supporting over 10,000 jobs in the area, a number that includes Samsung employees and the indirect jobs created by the chipmaker's presence.
Tuesday's announcement was celebrated by Austin's mayor and the head of the Austin Chamber of Commerce. Both issued written statements praising Samsung's decision.
Mayor Steve Adler noted that this additional investment was discussed with Samsung when he went to South Korea this summer and said he was "thrilled" by the news.