NXP Semiconductors NV may significantly expand its manufacturing operations in Austin as companies rush to boost chipmaking capacity in the United States.
The Netherlands-based semiconductor producer is considering adding to either of the two large campuses it already has in the Texas capital. According to information presented to Austin Independent School District trustees on May 10, the company could invest $2.6 billion and create 750 to 800 jobs with an average annual salary of more than $100,000.
NXP (Nasdaq: NXPI) is also considering other locales for the project, site selection consultants told the AISD board. A final decision on where it will invest is expected in the fourth quarter of 2022, with construction slated to start in 2024 and operations at the new facility beginning in the fourth quarter of 2026.
NXP is seeking Chapter 313 incentives from the Austin school district. An estimate of the size of possible incentives was not immediately available. Chapter 313 of the Texas tax code allows school districts to cap the taxable value of a property for a portion of school taxes for up to 10 years, often saving companies tens of millions of dollars.
If NXP does choose Central Texas for the expansion, it would add to a rush of large semiconductor projects for the region. Samsung Electronics Co. Ltd. is set to develop a semiconductor plant — at least $17 billion in investment — in the small city of Taylor, and other companies have been looking to expand in the Austin area or place operations here.
Chapter 313 became a political issue during the 2021 Texas Legislature and was not renewed, meaning it is set to expire at the end of this year. The Texas comptroller has asked for applications to be submitted by June 1, further upping the pressure on companies hoping to make use of the tax breaks.
Only new manufacturing or renewable energy projects are eligible for Chapter 313 incentives, which have been used sparingly in the Austin area. However, they have become more popular as of late: Samsung was last year approved for Chapter 313 incentives, and Tesla Inc. was also approved for them for its electric vehicle plant in eastern Travis County. Infineon Technologies AG is seeking them as it considers expanding its Southeast Austin semiconductor plant, while Applied Materials Inc., a major supplier to the semiconductor sector, has applied for Chapter 313 incentives in Hutto.
Through mergers, NXP has a longstanding presence here. Its existing facilities are in Southwest Austin on West William Cannon Drive, which is also its U.S. headquarters, and in far East Austin on Ed Bluestein Boulevard. The site selection consultants said NXP has about 1,300 employees in the Austin area. The company arrived in Austin in 2015 when NXP purchased Freescale Semiconductor, which had previously spun off from Motorola. NXP recorded 2021 revenue of $11 billion and had about 31,00 employees at the end of last year. It makes chips used in cars, mobile phones, communications infrastructure and other products, and has other semiconductor factories in places such as Arizona, Singapore and the Netherlands.
Representatives for NXP touted community benefits to Austin ISD trustees, including the many construction jobs that would be supported by the expansion and chances for the company to work with the district on internships and other educational programs. The AISD board did not vote on the application on May 10 but could do so at its next regular meeting on May 19.
NXP also hopes to receive funding through the Creating Helpful Incentives to Produce Semiconductors for America Act. The CHIPS Act, currently pending before Congress, could provide $52 billion in funding to boost domestic semiconductor production.
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