Visions of a U.S. Computer Chip Boom Have Cities Hustling

TAYLOR, Texas – The shortage of computer chips has dampened the energy of the global economy, punished various industries such as automakers and medical device makers, and raised fears of high inflation.

But silver lining has begun to appear in many states and cities in the United States: efforts to accelerate chip production in the United States have led to the creation of a busy chip factory in their backyard. And they’re running to get a piece of the potential boom.

One of those cities is Taylor, about 17,000 Texas cities about a 40-minute drive northeast of Austin. Leaders here are pulling out all the stops to get the इच्छित 17 billion Samsung plant the company wants to build in the United States early next year.

The city, its school district and county Samsung are planning to provide millions of dollars in financial incentives, including tax breaks. The community has also arranged for piped water from nearby counties used by the plant.

But Taylor is not alone. Officials in Arizona and Genesis County in upstate New York are also trying to attract the company. There are also politicians in nearby Travis County, Austin’s home, where Samsung already has a plant. Locations in all three states offered “strong property tax cuts” and funding to build infrastructure for the plant, Samsung said in a filing. Congress is considering whether to subsidize chip makers in the United States.

One wonders where Samsung’s plant will land. The company says it is still weighing where to put it. The verdict is expected to be announced on any day.

The federal government has called on companies like Samsung, one of the world’s largest manufacturers of high-tech components, to build new plants in the United States, citing financial and national security. Intel broke ground at two plants in Arizona in September and could announce a location for its planned manufacturing campus later this year.

It can only be a practice. The Senate passed a bill this year to provide $ 52 billion in subsidies to chip makers, a plan backed by the Biden administration that would be Washington’s largest investment in industrial policy in decades. The House has not yet considered it. The nine governors, in a letter to congressional leaders, said the fund would “provide a new, powerful tool in our states’ economic development toolbox.”

In Taylor, the prospect of Samsung’s arrival is also raising hopes. Business owners say this will bring more protectors to local breweries and quiet downtown areas. Parents think the factory’s state-of-the-art assembly line will inspire high school students in the city. Residents believe land prices will rise soon – prices have already risen in recent months, a real estate agent said.

“Something like that could be a bullet in the arm,” said Ian Davis, chief executive of the Texas beer company, which opened a taproom in downtown Taylor five years ago.

The majority of semiconductors – an industry that grossed about $ 450 billion in 2020 – are made in Taiwan, South Korea and mainland China. The United States controls only 12 percent of world production.

Lawmakers say the lack of a chip explains how America’s limited role in the industry puts the country’s economy in a precarious position. Politicians fear that China is taking steps to increase its control over global semiconductor supplies, potentially leaving the United States at a technical disadvantage against geopolitical rivals that could affect national security.

But the city’s efforts to lure these plants – and how much money taxpayers have to pay – to get a piece of the high-tech economy are raising questions.

Chandler, Ariz, approved $ 30 million in water and road improvements in September to support the ground-breaking Intel plant. Phoenix, another major chip maker, will spend approximately $ 200 million on infrastructure for the new plant of Taiwan Semiconductor Manufacturing Company. When the company announced the plant in 2020, it said subsidies were crucial to its plans.

Critics of corporate tax incentives say the money could be better spent on infrastructure and public schools. He says cities may be spending taxpayers’ money unnecessarily, as factors such as talent availability and natural resources are more important to chip makers than subsidies. And they argue that cities are sacrificing the most important things that can contribute to large industrial projects: tax revenue.

“There are obvious benefits,” said Nathan Jensen, a professor at the University of Texas at Austin who studies subsidy programs. “The problem is, if you are going to give the company a lot of benefits in order to get it down.”

Many residents in Taylor said they would have to pay the price to pay the supercharge for the city’s revival.

Taylor – the name for a railwayroad executive – was once a center for shipping cattle and cotton. The Louis Mलरller barbecue opened in 1949, and carnivores still draw with their brisket and beef ribs.

But in recent decades, residents say, Taylor’s downtown has lost some of its vitality.

They have tried to change that by attracting new small businesses to the city and renovating the old building which now houses Mr. Davis’s taproom, converted lofts and a coffee shop that offers babka and chocolate-tahini brownies. The second group restructured the city’s old high school to house small businesses, including restaurants and pinball bars. The city created a downtown park.

“Bringing it on, something is going to happen here indefinitely, it will bring a lot of revenue to our city and to our schools, in particular,” said Susan Green, a resident of Taylor who has children in the school system.

Austin Mayor Steve Adler said Austin’s subsidies to Samsung in the 1990s had a positive effect on the city, which has grown rapidly in recent years. Tesla and Oracle recently moved their corporate headquarters to Austin, where Facebook and Apple have major operations. According to one estimate, the city is the highest in the country for commercial real estate investment.

Austin and its surrounding counties have held their own talks with Samsung about the company’s new plant. Mr Adler said he wanted the city to be a competitive venue for the Samsung plant.

“It’s definitely benefited our city and our region, to be here,” Mr. Adler said of Samsung. But Pat Garofalo, state and local policy director for the American Economic Liberties Project, a liberal group criticizing the big tech companies, said money would be better spent on projects that would make the city attractive for a variety of businesses – like public schools – rather than a single contender.

He said manufacturers felt the “very real problem” was the lack of semiconductors and were “using it to capitalize on the tendency among state and local authorities to pay taxpayers a lot to host one of these facilities.”

Austin City Council member Vanessa Fuentes said residents in her district are worried about being pushed out of their homes or seeing corner stores instead of expensive grocery stores. She said the city has an “upper hand” in dealing with tech companies and should ensure that any agreement reached with tech companies is sufficient for existing residents.

“If it’s not good enough, we don’t have to do it, obviously,” she said. “Because the risk of what could happen with this type of increase, especially in the case of displacement, is very high.”

In Taylor, Samsung’s booster believes they can manage those 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 help create jobs.”

To sweeten the deal, Mr. Davis recently made another offer to the chip maker at a public meeting: he will make Samsung Pell L.

“I think 5,000 daily construction workers protect all of these small businesses – the pros will outweigh the obstacles by a mile,” he said.