Why Cities and Towns See a Huge Economic Opportunity in the Semiconductor Bill

The Senate on Wednesday approved $54.2 billion in subsidies to expand semiconductor production and other technology initiatives in the U.S., and if passed by the House as expected, the funds would be a big economic development boost for small towns and big cities. 

In Taylor, Texas, a city of 16,000 residents about 30 miles northeast of Austin, Mayor Brandt Rydell is seeing firsthand what expanded semiconductor production means to communities—and he was almost speechless in trying to describe the changes during a phone interview.

Samsung Electronics last November chose a deserted 5-million-square-meter plot of land the city never thought would bring much revenue to build a semiconductor plant, which the South Korean company said would be its biggest investment in the U.S. ever.

Then last week, the company said in a filing with the state that its long-term plans for Taylor could grow to spending $192 billion to build 11 fabrication plants, creating a total of 10,000 jobs.

Though the filing fell short of being a promise, and Samsung declined to comment, Rydell said he is optimistic the Senate’s passage of the semiconductor bill will lead to more investment in his town. U.S. Mayors and other elected officials have said they hope it will create 1.1 million jobs in their communities over the next six years.

Rydell said the infusion of the bill’s subsidies raises the chances the manufacturer will make that level of investment in Taylor (although Samsung declined comment).

“I’ve told people that the $17 billion announcement last year was mind-boggling,” Rydell said. “Now to hear there could be 10 times that level of investment, I’m literally speechless when I try to articulate how transformative it’s going to be.”

It would reverse the fortunes of Taylor, which, he said, was founded as a railroad town in 1876 and for years was “a pretty big economic power in the region.” But the construction of Route 35 through Round Rock west of Taylor in the 1950s drew away economic development.

The biggest employer in town is an operations center for the Electric Reliability Council of Texas, which operates the state’s electric grid system and employs about 700 people. Samsung will employ three times as many people. 

In addition, Rydell said, more jobs are expected to come as contractors for the plant arrive. And all the new workers will mean thousands more people will be shopping in the local stores.

“It’s going to be an almost limitless opportunity for our local businesses,” he said.

Other Benefits, Too

Samsung is also donating funds to the Taylor Independent School District to create a Samsung Skills Center to prepare young people to work in the burgeoning industry, something that the district’s superintendent, Devin Padavil, said in a press release would “transform the lives of our students.” 

And there will be other impacts, like better-manicured parks and cemeteries and more fire trucks.

Though Taylor gave the company tax breaks to lure Samsung, the project will increase its revenue by $6 million next year.

Taylor’s chief financial officer, Jeffrey Wood, noted at a recent City Council meeting that the city’s budget last year was only $17 million. “We’re talking $6 million. That’s a third of what our general fund budget was. So this is huge for the city of Taylor,” he said excitedly. 

Wood ticked off some of what the money will pay for: “Public safety equipment, equipment for parts, backup generators for City Hall and other facilities. Park improvements, master plans of trails and sidewalks, capital investments requested by city departments.”

There are other signs of change in the city, where according to the U.S. Census, 70% of residents are white and only .5% are Asian. Rydell said when his wife was shopping at the local supermarket recently, she said she noticed it started carrying kimchi, a Korean side dish made of salted, fermented vegetables.

Big Cities Also Win

Another city seeing benefits of growing the semiconductor industry, and is hoping for more, is Phoenix, where the Taiwan Semiconductor Manufacturing Co. announced in 2020 it will build a $12 billion plant. By the end of 2023, it will create 5,000 more jobs in the city, Mayor Kate Gallego said in an interview with Route Fifty. Creating more jobs, she said, would bring other benefits like increasing the number of grocery stores.

Attracting the plant also meant Phoenix would come out of the pandemic “in a better position,” she said. “My goal is to create more high-paying jobs in the city,” she said. Indeed, according to the Semiconductor Industry Association, workers in the industry make an average of $170,000 annually. 

The mayor also noted that the local Maricopa Community Colleges are starting a program to train students to work in the semiconductor industry.

In addition, Gallego, who worked in economic development and strategic planning for the Phoenix metropolitan area’s electric utility before becoming mayor, said the plant would help diversify the local economy.

At the same time, Gallego argued that the semiconductor jobs for Phoenix would benefit the nation overall. “I’ve heard from some residents that they’ve had problems buying a new car tied to the semiconductor shortages. ... We want to make sure we address those challenges. It’s important that we manufacture them in the United States. More and more devices need semiconductors. Phoenix can lead the way.” 

On the other side of the country, Saratoga County, New York, is hoping the Senate bill’s approval means GlobalFoundries will expand its semiconductor plant, as the company has promised.

The passage of the measure “would help strengthen the semiconductor industry in Saratoga County, not only by encouraging business leaders like GlobalFoundries to continue investing in our County, but also helping to attract supporting businesses, collectively bringing the potential for thousands of good paying jobs to our community,” County Administrator Steve Bulger said in a statement.

Already, he said, the company has helped  Saratoga become “the fastest growing county in upstate New York,” with the state’s “lowest property and sales tax rates.”

“We will plant the seeds for developing the tech hubs of tomorrow in places with great potential but has been overshadowed by places like San Francisco or Austin or New York City,” Democratic Senate Majority Leader Chuck Schumer, of New York, said Wednesday before the semiconductor bill passed in a bipartisan 64-33 vote.

“This will help cities like Buffalo or Indianapolis into new centers for innovation and the result will be countless good-paying jobs and a bright future for those areas for years to come,” he said.

The Senate bill, which includes billions for semiconductor research, is bringing hopes to college towns, too. SkyWater Technology, a Minnesota semiconductor company, said last week it is working with Purdue University in Indiana to get funding from the bill to create a $1.8 billion research and development and production facility on the campus.

The facility would be “transformative in the Midwest, where the competition for talent and business investment is not for the faint of heart,” said John Dennis, mayor of West Lafayette, where the Purdue campus is located, in a statement.

The State University of New York at Albany also has plans for a semiconductor research center.