COVER STORY • SAMSUNG

ONCE AGAIN, EVERYTHING IS BIGGER IN TEXAS

How Williamson County Landed the Largest Economic Development Deal in Lone Star History

WELCOME, SAMSUNG

rendering credit: Samsung

by Ann Marie Kennon and Charlotte Kovalchuk

On November 24, Samsung officially announced Taylor, Texas was the winning site to expand their semiconductor operations. In the final stages, Taylor eclipsed two locations in Arizona and one in New York. Earlier in the process, Samsung presciently published an economic impact study, which stated, “Because of its strong ties to the local community and the successful past 25 years of manufacturing in Texas, Samsung Austin Semiconductor would like to continue to invest in the city and the state.”

JUST HOW BIG IS IT?

CHAPTER 381 AGREEMENT

When complete, the Samsung Taylor plant will span more than 53.8 million square feet. For comparison, the Austin Amazon Distribution site, Tesla Giga, and Austin Apple headquarters—together—

A Chapter 381 agreement is a perforwould fit inside five times. mance-based agreement to provide incentives to stimulate, encourage, and develop business and commercial activity in a county. Incentives are paid or activated based upon the developer meeting specific objectives.

In Williamson County’s agreement, Samsung will construct a minimum of six million square feet of facilities, with incremental deadlines, by January 31, 2026. The company also must create 1,800 full-time jobs. If these conditions are met, the county will grant Samsung an amount equal to 90 percent of ad valorem taxes paid by the company for the first 10 years of the agreement. For the second 10 years of the term, the County will grant an amount equal to 85 percent of ad valorem taxes paid by the company. Precinct 4 Commissioner Russ Boles said, “This agreement is a win for Williamson County because it is performance based. Williamson County will collect all taxes on the assessed value of the company and does 

WELCOME, SAMSUNG

SAMSUNG IS THE LARGEST-EVER ECONOMIC DEVELOPMENT CORPORATION PROJECT IN THE STATE OF TEXAS, AND THE LARGEST FOREIGN-BORN IN THE NATION. “EVEN MORE THAN JOBS AND TAXES, THE HOUSING, ANCILLARY RETAIL, AND SERVICE BOOM HAS ALREADY BEGUN." ~JUDGE BILL GRAVELL

not grant back any funds until performance measures have been met. It allows us to be competitive in recruiting large companies like Samsung, while holding them accountable to their promises for the jobs and improvements they will bring.”

DEVELOPMENT AGREEMENT

In the development agreement, Williamson County agreed to specific road improvements necessary for safety and mobility around construction and operation of the facility. This includes improvements to CR 401 and CR 404, as well as construction of a future county road. Construction on Segment 1 of the Southeast Loop began in July, is mentioned in the agreement, and is expected to be complete in June 2025. In support of the project, the Texas Department of Transportation has pledged $67 million in its 10-year Unified Transportation Program for construction of Segment 3 of the Southeast Loop, which includes a grade-separated railroad crossing at FM 3349 and US 79.

ECONOMIC IMPACT

Mark Thomas, president and CEO of the Taylor Economic Development Corporation said, “A $17 billion investment would have an impact on a very large community. The impact it will have on a community our size is unprecedented. The world has heard about this already and we’re seeing inquiries beginning to increase. It puts Taylor on the map. High-tech companies will ask, ‘If the largest high-tech company can go to Taylor, why can’t we?’”

Mark expects the Samsung project to create 1,800 jobs with salaries starting at $65,000 a year for positions across the board, including technicians, administrative jobs, and everything in between. He anticipates workers commuting from all over Williamson and Milam Counties, but hopes many will choose to make Taylor their home. “We think we’re going to be ahead of the housing curve and have good places for workers to live if they choose,” he says.

Samsung’s tax payments—in year 4— will be twice as much as the top ten largest tax-paying companies in Williamson County, combined.

PARTNERSHIPS

While Judge Gravell was the point man, the scaled agreements are the product of work and cooperation by individuals and agencies at all levels. Much work and commitment was provided by the City of Taylor, Taylor ISD, Williamson County, the State of Texas, and the Federal Government. There is also a utilities partnership with EPCOR, a Canadian company that provides clean water and energy to communities in Canada and the United States (see page 11).

“SEISMIC” ECONOMIC IMPACT + YEAR 4

The new plant will produce the most advanced semiconductors in the world but, today, what those will be is unknown. Judge Gravell explained, “This type of technology grows and changes so quickly that the only thing the Samsung folks know is that they will be building semiconductors. Their current factory replaces $100-200 million in equipment every year to keep up with evolving science and development. As such, specifics of design and capability will change many times before construction is complete so even the machines that will build the semiconductors have not been built yet.”

“YEAR 4” OF THE SAMSUNG AGREEMENT IS SIGNIFICANT AS IT IS THE EXPECTED DATE OF THE RIBBON CUTTING—MANUFACTURING WILL BEGIN, SAMSUNG WILL BEGIN EARNING REVENUE AND PAYING TAXES

In the meantime, he anticipates the construction force to peak at 12,000 workers and, in Year 4, Samsung will hire or retain 1,800 direct employees. The Judge says, “I expect very high employment numbers even after the facility opens. Whenever I visit the first plant in Austin, I ask about the number of contractors onsite that day; it is usually between 3,000 and 6,000. Their process is nearly fully automated because the pre-chip wafers cannot be touched by human hands or air. Their machines are running 24/7 and everything they do is fluid, so there are people providing everything from machine and HVAC maintenance to cleaning and landscaping.”

While the County has provided a 20-year schedule of tax incentives for the company, benefits provided to the Taylor ISD are also significant. The Judge explained, “For the past 20 years, Manor ISD has done business with Samsung Austin and has been able to pay for multiple new buildings with cash. That is the kind of impact a major corporation like this has.”

WELCOME, SAMSUNG

Samsung chips are used in the devices and technology we use every day, virtually being the tiniest engines that make the world run.

Judge Bill Gravell (center) with Williamson County, Taylor, and Samsung partners celebrate the announcement with a custom baseball jersey at mid-field in Dell Diamond. (courtesy Bill Gravell)

Aside from the potential tax benefits, Taylor Superintendent Dr. Devin Padavil is encouraged by Samsung’s public assurance that they will significantly invest time and resources into the ISD. “Taylor ISD and Taylor, Texas are honored and proud to be selected as the home for the new Samsung Semiconductor Plant in North America. Our partnership with Samsung will provide us an opportunity to transform the lives of our students through learning opportunities, internships, resources, and financial support. We are preparing our children to contribute and compete in a global society and, in many ways, Samsung is bringing a global society to them.”

Samsung’s taxes in Year 4 will be paid to Williamson County, the City of Taylor, and Taylor ISD. Taylor Mayor Brandt Rydell’s team also negotiated $300,000 in philanthropic donations to the City of Taylor, per year, for the next 30 years, for a total of $9 million in gifts to benefit education across the board. 

WELCOME, SAMSUNG

At the Table

WITH JUDGE BILL GRAVELL

by Ann Marie Kennon

photo courtesy Bill Gravell

When Williamson County Judge Bill Gravell met with BGR Group corporate consultant Jerry Strickland last January to discuss pandemic testing and vaccinations, he made a connection that would impact Williamson County for generations. BGR Group represents multiple large corporations. Strickland later called to ask the Judge if the County would be interested in making a corporate pitch for a $17 billion project.

“He gave me 36 hours to respond,” Judge Gravell says. “I sent out emails with details about the company, and received affirmative responses from Leander and Taylor. While Taylor is now receiving international attention as the awardee, I am incredibly proud that Leander was one of the top six locations in the world.” He notes Leander did not go further only because Samsung had larger requirements for land to create a significant space buffer at the site.

After months of negotiations, Judge Gravell recalls being exhausted at the end of every day. “It was stressful and very complicated; I went home many nights wondering when would would cross the finish line."

His greatest takeaway—quoting JFK—is that a rising tide lifts all boats, but he says of Samsung: “This is a controlled tsunami. It is a legacy not likely to be topped and I am still wondering how we got here; why would the Lord allow us to be involved in it? I’ve never worked so hard in my life as I have in the last nine months. I don’t believe I’m arrogant but I am proud that my grandchildren will pass by the Samsung site and say, ‘My Pawpaw helped bring this to Williamson County.’”

He reflects on these and other extraordinary circumstances during his first four years as Judge. He believes it might make sense to write a book about it; not just about the biggest deal in American history with foreign investment, but a guide to landing it. “A global pandemic, Texas’ worst snowstorm, the largest deal ever, and a new multi-million dollar children’s hospital; God only puts us in those places that give us the experience to get through to the next thing.”

1 mi.

Samsung’s new manufacturing site (red outline) will rest on 1,200 acres in the southwest part of Taylor near Highway 79.

The graphic shows the size of its footprint compared to some of the area’s other large company sites.

(maps.google.com)

WELCOME, SAMSUNG

SAMSUNG

Ann Marie Kennon

annmarie@wilcobr.com

Just Who is Coming to Taylor?

THE SOUTH KOREAN MULTI-INDUSTRY MANUFACTURER KNOWN AS IS THE #42 MOST VALUABLE BRAND IN THE WORLD 2

1

 Samsung is South Korea’s largest chaebol—a large, family-run conglomerate. Historically, family-owned companies have played an important role in the nation’s economic development, and none more so than Samsung. It was founded as a trading company in 1938 by Lee Byung-chul. He led the company until his death in 1987 and was succeeded by his third son Lee Kun-hee, whose tenure was known for as much scandal as success. He remained chairman until 2014.  The group began diversifying in the 1940s and 50s and entered the electronics industry in the 1960s. Electronics hardware and retail products were a significant driver in the company’s global sales trajectory.  Today, the company has co-CEOs: Kyung Kye-hyun and

Han Jong-hee.  Samsung Electronics Co., Ltd. (SSNLF) is traded on the

Korean stock market, NYSE, and NASDAQ.  The company’s headquarters are in Seoul. Their semiconductor manufacturing takes place in eight plants around

South Korea, four in China, and one in Austin.  Over the past 10 years, their affiliate companies were responsible for approximately 20 percent of the nation’s total exports. It is rumored that their economic dominance has provided the company with influence outside the electronics industry and into politics, media, and culture.

Samsung in Texas

 In 1987, Samsung was penalized by the United States International Trade Commission for unlawfully selling computer chips in the United States without securing licenses from the chip inventor, Texas Instruments, Inc. The company paid the fine, enabling it to continue selling chips and the rapidly growing series of electronic devices that used them.  Dr. Sang Sup Jeong is the President of Samsung Austin

Semiconductor.  Samsung Austin Semiconductor, finished in 1997, was the first Samsung fabrication plant outside of Korea. Prior to the ink drying on the 2021 Taylor agreements, it was the largest foreign investment deal in Texas and one of the largest in the nation. In 2006, the company built a second, larger building at the site and added a second production line. Today, the Austin foundry produces approximately 100,000 wafers per month.

In the microelectronics industry, a semiconductor fabrication plant—commonly called a fab, or foundry—is a factory where integrated circuits and similar devices are manufactured.

The Industry

 The global semiconductor industry is led by companies from Taiwan (TMSC), the United States (Intel), South Korea (Samsung), Japan, and the Netherlands. In 2020, Samsung’s market share in the semiconductor industry worldwide was 12.4 percent. Since 2006, the company has consistently ranked in the top two semiconductor companies by worldwide foundry sales revenue. Samsung’s global semiconductor sales revenues for 2020 reached $466.24 billion (USD).3  The lack of movement in the top spots somewhat validates the fact that Samsung is one of only a handful of companies capable of manufacturing advanced semiconductors.

Specifically, only Samsung, TMSC of Taiwan, and Intel in the United States are able to amass the multi-billion-dollar capital investment required to build foundries.

1 The word Samsung translates to “three stars” 2 VisualCapitalist.com 2021 ranking 3 Thomas Alsop, Statista.com

Powering Samsung

Partnerships are not limited to government entities

SAMSUNG

Before Samsung announced it will build a new semiconductor plant in Taylor, it may have appeared to some that this small city in eastern Williamson County, with a population just over 17,000, could not accommodate the needs of a foundry that never shuts down, begins operations with 6 million square feet, and hosts as many as 8,000 daily workers.

Thanks to agreements with companies from Rockdale to Canada, Samsung will have the resources necessary to prepare for, build, and open the doors to the new facility in 2024. Samsung representative Michele Glaze affirmed in a statement, “The availability of reliable utilities is fundamental to all semiconductor manufacturing. A semiconductor manufacturing facility uses several millions of gallons of ultra-pure water and more than 100 megawatts of power each day. It was one of many variables in the selection process.”

Texas Water

Williamson County Judge Bill Gravell focused on Samsung’s water requirements because access in Central Texas is something city and county leaders must ensure at every level. “We couldn’t take away from our existing water supplies here. We have thousands of homes under construction and businesses in operation; we knew we had to be innovative and creative.”

To meet the need, Williamson County’s team brokered a meeting between Samsung and EPCOR, which owns water rights for the Carrizo-Wilcox Aquifer*, and created a solution that will funnel millions of gallons of water into Williamson County from adjacent Milam County.

The aquifer extends from the Louisiana border to the Mexico border and will serve as an entirely new source of water for Williamson County. “This is a two-fold benefit for Williamson County. We have been trying to connect to the Carrizo-Wilcox for years,” the Judge said. He assured that the new water agreement would not negatively impact locals; “EPCOR will be bringing in water from an alternate water site that won’t take away from our residents. Not only do we have tax revenue from Samsung, and water for generations to come, EPCOR will be paying the tax on the half-billion-dollar infrastructure that will bring the water from that alternate source across the miles to Taylor.”

Effluence

On the other end, EPCOR will also provide wastewater services. Judge Gravell added, “The wastewater alone will cost $500 million, and EPCOR will fund that effort as well. Both companies are ambitious about re-using water, so we anticipate recycling Samsung’s wastewater and selling it back to them.” Williamson County Commissioners and Taylor City Council both approved the water and wastewater agreements, which, if all partners work well, could result in a near90 percent recycling.

WE WERE ABLE TO BRING A CANADIAN AND KOREAN COMPANY TOGETHER TO PROVIDE WATER. TO OUR KNOWLEDGE, THIS IS THE FIRST TIME CANADA HAS PARTICIPATED IN A DEAL LIKE THIS, AND IT IS WONDERFUL TO SEE THREE NATIONS COMING TOGETHER FOR COMMON GOOD AND NATIONAL SECURITY.” ~JUDGE BILL GRAVELL

WELCOME, SAMSUNG

EPCOR has been providing electric power since 1891. It was the first municipally owned electric utility in Canada. They diversified into water treatment in 1903 and today provide water and electricity in Canada and the U.S.; Arizona, New Mexico, and parts of Texas. In 2016, EPCOR USA Inc., a subsidiary of EPCOR Utilities Inc., acquired the 130 Pipeline Project, a 53-mile wholesale water supply pipeline that delivers groundwater from Burleson County to eastern Travis County.

WELCOME, SAMSUNG

SAMSUNG

Key to National Security

The concentration of fabrication facilities in East Asia creates supply chain risks. Trade disputes, military conflicts, or other disruptions in the region could significantly affect U.S. access to semiconductors.

In 1990, China had no chip manufacturing capabilities. Today, their government is subsidizing semiconductor production, putting them on track to be the global leader in chip manufacturing by 2030. This trend makes increasing U.S. production of semiconductors critical to our own national security.

In March 2021, the National Security Commission on Artificial Intelligence found:

After decades leading the microelectronics industry, the United States will soon source roughly 90 percent of all high-volume, leading-edge integrated-circuit production from countries in East Asia.

This means the United States is almost entirely reliant on foreign sources for production of the cutting-edge semiconductors critical for defense systems and industry more broadly, leaving the U.S. supply chain vulnerable to disruption by foreign government action or natural disaster. (Source: NSCAI.gov)

Fortunately, Senator John Cornyn and others in the Senate are working, with bipartisan support, on the CHIPS for America Act, which will boost domestic manufacturing and lower the risk of supply chain interruption or corruption. Proactively, the American Foundries Act will provide grants and economic development incentives for research and development. The fortification to be gained from these bills led to their inclusion in the FY 2021 National Defense Authorization Act.

Why it Matters

Williamson County Judge Bill Gravell says, “National security is the number one reason to support this project. Semiconductors are the brain of every electrical device; from your thermostat to your pacemaker to a stealth bomber. We should not have to depend on countries we don’t trust to produce things we use to protect ourselves. Further, when the next pandemic or ice storm occurs, I want the things we depend on for survival to be made in the USA—I want the most advanced semiconductors in the world to be made in our backyard.”

Ann Marie Kennon

annmarie@wilcobr.com

What if...?

The Judge frequently asks others to consider the scene at empty car dealerships as an example of the means by which China may be able to control our economy. Providing fewer chips will prevent manufacturers from completing production on many products Americans take for granted, which will handicap our GDP and widen the nation’s global trade gaps.

“Consider how reliant we are on technology and the Internet,” the Judge says. “Our business environment, health care, communication, and education are critically dependent on devices. Samsung is from South Korea—a friendly nation—and we must consider the electronic brains in our cell phones also go into our tanks and planes. Those we purchase from China may be made to be hackable. Perhaps they will be programmed with malware and designed to fail, leaving our businesses dark, unplugged, and forcing us to send ever-increasing revenues overseas.”

Unified Support

Given all factors, it is significant that the partners in the Samsung agreement are not just in Taylor. Judge Gravell adds, “This wasn’t fighting to bring a new car or furniture manufacturer to America. This went all the way to the White House and was aggressively pursued by both parties. In Williamson County, we are twice fortunate that Samsung will be here.”

GLOBAL SEMICONDUCTOR CAPACITY • 2019

Between 1990 and 2020, U.S. manufacturing of semiconductors, critical to our economic and national security, fell from 37% of global output to 11%.

In 2020, the total value of electronics assembly estimated was $1.4 trillion. Analysts expect it to increase to approximately $1.6 trillion in 2025.

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Modern MOS transistors, the building blocks for silicone semiconductors, were imagined in the 1920s, and were perfected by many scientists and engineers over more than 50 years. Industry analyst Jim Handy estimates 13,000,000,000,000,000,000,000* transistors have been manufactured since 1947.

(13 sextillion • Source: Computer History Museum)

PRIOR TO 9/11/2001, THE MARKET FOR BIOMETRIC SCANNERS WAS PRIMARILY SPY MOVIES. THE EMERGENT DEMAND NOW REQUIRES NEARLY 1% OF ALL CHIPS MANUFACTURED.

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