Samsung Received 430 Billion KRW in Incentives Over 20 Years in Austin, USA... Created 10,000 Jobs

Samsung Electronics Austin, USA System LSI Line Overview.

[Asia Economy Reporter Jeong Hyunjin] As Samsung Electronics is engaged in a tug-of-war over tax incentives for large-scale new and expanded factory investments in Austin, Texas, an analysis has revealed that it has received approximately 430 billion KRW in incentives from the city of Austin over the past 20 years. The local community has benefited from a total investment of $17 billion and the creation of 10,000 direct and indirect jobs as Samsung Electronics made more aggressive investments than those agreed upon with local governments.

According to foreign media such as the Austin Business Journal and related industries on the 8th, since Samsung Electronics established its Austin factory in 1997, the total amount of tax reductions, subsidies, and other incentives received or scheduled to be received has been estimated at $380 million (approximately 430 billion KRW). Looking at the details, Travis County, where Austin is located, provided about $65 million in property tax rebates from 2009 to 2019. Additionally, Austin and other local governments reportedly provided tax benefits of $92 million and $203 million respectively based on Chapter 380 and Chapter 313, which offer tax incentives for investments aimed at regional economic development. In 2006, Samsung Electronics also benefited from a $10.8 million subsidy through the Texas Enterprise Fund.

Local foreign media reported that these various tax benefits are the result of Samsung Electronics' large-scale investments over the past 20 years. Samsung Electronics established its first factory in Austin in 1997 and began production in 1998, followed by a second factory in 2007. The total investment to date is around $17 billion. During this process, factories were built on more than 210,000 square meters of land, creating 10,000 jobs including about 3,000 factory employees.

For example, based on an agreement made in 2005 under Chapter 313, Samsung Electronics planned to invest $2.5 billion from 2006 to 2017 but actually invested $9.2 billion. At that time, the number of employees was 950, and the company promised to hire an additional 700, but by 2017, the factory had created 1,499 new jobs, including 805 high-quality jobs, according to foreign media. Samsung Electronics reportedly received about $120 million in tax benefits based on this.

Samsung Electronics' past investments and tax benefits in Austin are drawing attention because the company is considering further investment in the U.S. In January, Samsung Electronics requested tax incentives of around $1 billion based on an additional $17 billion investment in Texas and Austin. Opinions are divided locally on this issue. Some argue that companies with a market capitalization of over $500 billion do not need separate incentives, while others say that without such benefits, Texas' high property tax rates would be a burden on companies.