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Comment by DC1350 | Hacker News Reader

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”

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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.

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.

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.

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.

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.

wouldn't income tax on employees or sales tax fix that?

School districts get some federal funding, but it's mostly from property taxes.

I have no idea how american school funding works, but property taxes? Is that really true?

That would mean that schools in richer areas with higher property values got more funding?

I think you're right. Semiconductor manufacturing is not a particularly employee-dense business, and the US must sustain power projection in the South China Sea and on the Korean Peninsula in the status quo, all the time, rain or shine. Even if you don't think about the product and supply chain, but only look at externalities, the US is less trapped in a battle of brinkmanship over Taiwan and South Korea if it has an alternative source of semiconductors in case of emergency. Keeping critical tech manufacturing in the Americas actually makes it easier for us to protect our allies in the Asia-Pacific region, by giving us less reason to make aggressive-looking moves that can be misinterpreted as offensive by China.

Still, there is a clear economic benefit from such a move closer to home, even in times of peace and predictability. The US economy is all about outsourcing the basement and keeping the penthouse. But the hosts of our outsourced industry can "tech up," so to speak. If we let Asia-Pacific totally dominate the semiconductor fabrication industry, it's only a matter of time before they dominate the semiconductor design industry as well.

While true that's more of a federal government interest while the tax breaks are coming from the local government. Maybe the local government will ask for some funding from the federal government.

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

"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.

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?

"50% abatement for 20 years?"

The article reads like that's what they are asking for from the City.

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).

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

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%

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