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If you’re wondering like me why they would bother building in an expensive country with fewer qualified workers: “To build a leading-edge manufacturing facilit

by DC1350 6y ago

If you’re wondering like me why they would bother building in an expensive country with fewer qualified workers: “To build a leading-edge manufacturing facility, Samsung needs rather huge incentives from authorities. In particular, Samsung is requesting combined tax abatements of $805.5 million over 20 years”

Flockster 6y ago
So 40 million per year? That does not sound like much..
- tyingq 6y ago
  "which essentially means that Samsung demands a 100% tax abatement from the county and 50% from the city." So the figure couldn't really be much larger.
  - WillPostForFood 6y ago
    50% tax abatement for 5 years from the City (which has a ~50% higher tax rate than the county). I can think of a lot of ways it could be much larger. How about 100% abatement for 5 years? 50% abatement for 20 years? 100% abatement for 100 years?
    - tyingq 6y ago
      "50% abatement for 20 years?" The article reads like that's what they are asking for from the City.
      - WillPostForFood 6y ago
        They are asking for 50% for 5 years for the city (which has a higher tax rate), and 100% for 20 years for the county (which is a smaller govt entity with a lower tax rate).
adriancr 6y ago
17B investment for 805M tax rebates... over 20 years... 5% of invested ammount... seems just like a way to get government involved and avoid them blocking investment.
- reddog 6y ago
  Only a small fraction of that $17B would be spent on building the plant and hiring workers (1800 jobs is what I've read). Most is for the extremely expensive equipment used to produce the chips and that will be bought and shipped in from elsewhere.
  - adriancr 6y ago
    First, those 805M are tax rebates, they need to generate taxable profits to get anything back. Second, even the 1800 jobs, say 100k avg - 180M a year vs 42M reduced taxable profits? Apart from that, sure, you have huge equipment costs, where they come from now means its an opportunity for local companies to get in the supply chain. I'm not sure what you are implying but this seems like a win anyway. It's also interesting to see companies investing in the US, it means there are opportunities long term and US hasnt lost the chip sector.
  - tinalumfoil 6y ago
    Presumably the government values US-based factories for reasons beyond just domestic employment (even if that's the biggest factor). Being able to produce chips in the US is good for national security.
    - reddog 6y ago
      Yes is is good for the US, but not so much for the Manor Independent School District that is being ask to not collect property (school) taxes on the plant despite the massive increase in attendance that it will generate.
      - adriancr 6y ago
        wouldn't income tax on employees or sales tax fix that?
stjohnswarts 6y ago
It's called Automation. Samsung can move senior people around to teach new people. It's not rocket science. Also they will never get that tax abatement from the current Austin city council. There's no way. They might get 20-25%
eqetnjxad 6y ago
It is strategically important for the US govt to have fabs in the US rather than next door to China.

by DC1350 6y ago

Flockster 6y ago

So 40 million per year? That does not sound like much..

tyingq 6y ago
"which essentially means that Samsung demands a 100% tax abatement from the county and 50% from the city." So the figure couldn't really be much larger.
- WillPostForFood 6y ago
  50% tax abatement for 5 years from the City (which has a ~50% higher tax rate than the county). I can think of a lot of ways it could be much larger. How about 100% abatement for 5 years? 50% abatement for 20 years? 100% abatement for 100 years?
  - tyingq 6y ago
    "50% abatement for 20 years?" The article reads like that's what they are asking for from the City.
    - WillPostForFood 6y ago
      They are asking for 50% for 5 years for the city (which has a higher tax rate), and 100% for 20 years for the county (which is a smaller govt entity with a lower tax rate).

adriancr 6y ago

17B investment for 805M tax rebates... over 20 years... 5% of invested ammount... seems just like a way to get government involved and avoid them blocking investment.

reddog 6y ago
Only a small fraction of that $17B would be spent on building the plant and hiring workers (1800 jobs is what I've read). Most is for the extremely expensive equipment used to produce the chips and that will be bought and shipped in from elsewhere.
- adriancr 6y ago
  First, those 805M are tax rebates, they need to generate taxable profits to get anything back. Second, even the 1800 jobs, say 100k avg - 180M a year vs 42M reduced taxable profits? Apart from that, sure, you have huge equipment costs, where they come from now means its an opportunity for local companies to get in the supply chain. I'm not sure what you are implying but this seems like a win anyway. It's also interesting to see companies investing in the US, it means there are opportunities long term and US hasnt lost the chip sector.
- tinalumfoil 6y ago
  Presumably the government values US-based factories for reasons beyond just domestic employment (even if that's the biggest factor). Being able to produce chips in the US is good for national security.
  - reddog 6y ago
    Yes is is good for the US, but not so much for the Manor Independent School District that is being ask to not collect property (school) taxes on the plant despite the massive increase in attendance that it will generate.
    - adriancr 6y ago
      wouldn't income tax on employees or sales tax fix that?

stjohnswarts 6y ago

It's called Automation. Samsung can move senior people around to teach new people. It's not rocket science. Also they will never get that tax abatement from the current Austin city council. There's no way. They might get 20-25%

eqetnjxad 6y ago

It is strategically important for the US govt to have fabs in the US rather than next door to China.