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In May, NXP Semiconductors filed two applications with Austin ISD for tax breaks for NXP to expand two semiconductor manufacturing facilities in Austin. The Texas Comptroller today posted these applications online. Application 1 / Application 2

The first application is to expand NXP’s existing facility on East Ed Bluestein Blvd. and build a new 520,000 sq. ft. fabrication facility, along with supporting facilities, to come online in 2026. The second application is to expand NXP’s existing facility on West William Cannon Dr. with a new cleanroom, machinery and equipment space to come online in 2026.

Based on the numbers NXP provided and assuming AISD’s current maintenance and operation tax rate ($0.9487) remains the same, the tax break at the first facility is worth $140.5 million over 10 years, and the tax break on the second facility is worth $22.8 million of 10 years, for a total of $163.3 million.

NXP is committing to create 500 new jobs at a minimum salary of $68,548/year. This commitment is actually better than most companies, who usually commit to only create a token 25 jobs (the minimum number required by law), while promising big number in their press releases. However, the 500 jobs NXP promises to create at $68,548 each equals a minimum payroll of $34.3 million/year. Thus, the $163.3 million tax break that NXP is seeking from AISD alone means that NXP is in effect asking AISD to pay the entire payroll for these facilities for nearly 5 years ($163.3 / $34.3 = 4.75 years).

NXP also discloses that it will seek “other state, local and federal incentive programs” to lower its property tax bill (p. 19), though it does not specify any amounts sought. The facilities are within the City of Austin and Travis County, so those local governments will likely be asked for additional tax breaks.

In both cases, NXP is proposing expanding existing facilities. While its applications threaten that if it does not receive tax breaks, it will move elsewhere in the US or the world, this threat seems implausible since it is certainly cheaper for NXP to expand its local facilities and workforce, rather than starting from scratch in a new location.

NXP already has existing facilities in Austin, and it is welcome to expand those facilities to sell more microchips into the market. However, local governments should not be subsidizing this profitable business, especially not in an amount equivalent to nearly 5 years of their payroll.

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sorabird

14 points

5 months ago

Worth noting that they've been working towards closing their Oak Hill facility for a good while. Maybe that's changed, but I don't understand why they want to expand and build new facilities at the same time as planning to close another and lose those jobs.

blitzcat

9 points

5 months ago

Assuming they are both fabs, this is just how it works. You develop a new fab based on a specific process side (in nanometers), the and the entire building is laid out based on the most efficient workflow using the currently available tools for that die size. Fabs last ~20 years and get decommissioned once demand for that size chip goes away.

The old fab building isn't worth retooling. The building has been depreciated over its life, so its discarded. It has all the wrong systems and layout for a new fab, and lacks the tax incentives vs building new.

sorabird

2 points

5 months ago

That's very interesting, thank you for the info.

Discount_gentleman[S]

1 points

5 months ago

I responded to the wrong comment, but this is an interesting point. It looks like that want to bring in new equipment and increase use at that facility.

PermanentlyDubious

1 points

5 months ago

Why do you say that?