Samsung Invests $3.6 Billion

Mayor Lee Leffingwell and City Manager Marc Ott announced this morning that Samsung Electronics is expanding its Austin operations in a big way – to the tune of $3.6 billion. The expansion of its semiconductor fabrication plant is anticipated to bring about 500 permanent jobs, and about 1,000 short-term construction jobs, to Austin.

That level of direct foreign investment is big economic news not just for Austin, but for the country, Ott emphasized. A city release cited the U.S. Chamber of Commerce as characterizing the $3.6 billion investment here, by Korean-based Samsung, as the largest 2010 private capital investment anywhere in the U.S. – and one of the nation’s ten largest in the last decade. South Korean ambassador Han Duk-soon visited Austin last week to help seal the deal, said Leffingwell, who called Samsung’s decision “A strong vote of confidence in our city.”

Ott recognized the work of city economic development and planning staff, in securing the Samsung commitment and rapidly getting building permits in place for construction that is “starting work right away, on a very aggressive construction schedule.” Asked why Samsung chose to spend its $3.6 billion in Austin, Ott replied “Because we’re great!” He referenced Kiplinger Personal Finance Magazine, which recently ranked Austin #1 among “Best Cities for the Next Decade,” based on criteria that included the business environment. The investment is “an incredible boost to the economy” with regional implications, said Ott. The new jobs will include 50 to 60 professional positions at a research and development innovation center.

“It’s no secret Austin is a great place to do business, and this type of investment speaks volumes about our city’s image on the national and international level,” said Leffingwell.

An existing city agreement with Samsung provides incentives to the company. However, that agreement addressed only fabrication of Samsung’s 300 millimeter chip, not the new large-scale integration microchips (used in smart phones) to be fabricated in the new facility. City officials said they were not yet clear as to what the new investment might involve in city incentives, but Leffingwell said the city had not committed to any additional tax abatements for Samsung.

Last August, Samsung announced plans to close and renovate Fab I, its older chip factory, and announced layoffs during the renovation. At the time, Leffingwell said Samsung anticipated a net loss of about 350 jobs.

The Samsung expansion comes on the heels of three significant economic incentive agreements this year: Facebook, LegalZoom, and Hangar Orthopedics. It’s also aligned with the city’s Global Commerce Strategy Initiative recently initiated by Kevin Johns, new director of the Economic Growth and Redevelopment Services Office. The initiative, Johns has said, focuses on international partnerships involving emerging markets, technology and cultural arts. Ott credited EGRSO for “creating a receptive environment for these types of foreign direct investments.”