Potential Semiconductor Factory coming to Lockhart area

Nearly a year after Central Texas was announced as the site for a “once-in-a-generation” semiconductor factory, another one is being planned for the region.

In documents made public Aug. 24, Boise, Idaho-based Micron Technology Inc. revealed publicly for the first time it could build a massive, eight-phased fabrication facility near Lockhart, a city about 35 miles southeast of Austin with a population of roughly 15,000 and a reputation as the barbecue capital of Texas.

Dubbed “Project Evergreen,” the project has a minimum qualified investment of at least $80 billion. Incentives applications also pledge at least 80 jobs, although that represents the minimum required through the state’s Chapter 313 program. If the company proceeds with the project, the job total would likely be much higher.

The facility would be located within a proposed reinvestment zone of unknown total acreage in Caldwell County and Lockhart Independent School District located in northern Caldwell County northwest of Lockhart along FM 2720. Construction on the first phase would start in January 2023 and commence operations by the end of December 2026, according to the documents. The project would be built in eight phases with the final phase scheduled to open by the end of 2042.

“Texas’s Chapter 313 program sunsets in December 2022,” Micron told Austin Business Journal in a statement. “Filing these applications now allows us to preserve options for potential future expansion needed to meet long-term memory demand. We have not made any final decisions regarding the location, timing or scope of any expansion plans.”

While there is no guarantee the project happens, the details became public through incentives applications posted to the state comptroller’s website. The company submitted eight applications through the state’s Chapter 313 program, which allows school districts to limit the taxable value of a property for a portion of school taxes. The Chapter 313 program allows a cap of $10 million to $100 million for up to 10 years.

In the applications, which were filed Aug. 9, the company laments the state’s high property taxes and said the appraised value limitation is “the determining factor” in whether it will put the fabrication plants, or fabs, in Texas. If it does not receive the limitation, the project could land in another state or outside the U.S. in Singapore or Japan. The application also noted the company does not yet own the Caldwell County property.

“Texas’s notoriously high property tax is often a burden on developers; thus, in the absence of a Chapter 313 value limitation agreement, the economic rate of return on this project would be greater in locations outside the state of Texas. Considering the large footprint of Micron, their ability to locate this project in an area where an economic incentive agreement can be secured is high,” the documents state.

The revelation from Micron (Nasdaq: MU), a maker of memory chips and computer data storage with facilities around the world, came seven months after Austin Business Journal reported the company was scouring the region for a factory site. It also followed federal approval of tens of billions of dollars in subsidies for domestic semiconductor production.

If the fabs do get built, they would amount to another huge shot in the arm in establishing Central Texas as a global hub for semiconductor production. In November, Samsung Electronics Co. Ltd. announced it would build a $17 billion next-generation facility in Taylor, northeast of Austin. Beyond that, the South Korean company is also considering investing nearly $200 billion more in additional fabrication plants, although Samsung has not yet committed to those plans.

The Austin area, long home to semiconductor innovation, is shaping up as a nexus for the future of the industry.

Micron eager to grow in US

Micron last year detailed plans to invest more than $150 billion over the coming decade to help address the global chip shortage and boost domestic semiconductor production, according to the Wall Street Journal. But those plans appeared to stall until the U.S. Congress last month passed the CHIPS Act, which offers $52 billion in incentives to chipmakers.

Representatives from Micron appeared alongside President Joe Biden as he signed the bill into law Aug. 9. The company said the same day that it planned to invest $40 billion through the end of the decade to expand its manufacturing in the United States, creating up to 40,000 jobs. A statement from the company noted that it would share additional plans within “the coming weeks” and that production would begin in the second half of this decade.

Micron President and CEO Sanjay Mehrotra said the CHIPS Act legislation would allow the company — which has manufacturing sites in Japan, Malaysia, Singapore, Taiwan, China and Virginia — to increase its domestic production from less than 2% of the global market to up to 10%.

U.S. Rep. Michael McCaul, R-TX, who was among the bipartisan supporters of the CHIPS Act bill, teased an announcement in an interview on Aug. 19, saying that “you’re going to see some other big companies that are gonna invest in (Central Texas) soon.”

He labeled the bill as critical to help companies expand their chip manufacturing, amid a global shortage of semiconductor chips spurred by the pandemic and geopolitical tensions, labeling it as a “national security issue.”

He said that the Central Texas region stands to benefit the most due to its ecosystem of higher education and tech companies, as well as its existing semiconductor industry. Among the issues that public officials around the area are combatting is availability of workforce to support these facilities, but he said that he hopes the fact that these jobs are “careers” and “good-paying” will be a selling factor.

The average wage proposed for jobs on the project is $71,167.80, according to Micron’s Chapter 313 application. But that number — along with the job total and investment total — is likely to change.

“This is a big shot in the arm. It’s going to have long-term consequences to it for the better,” McCaul said. “It’s refreshing to see something passed that is bipartisan but can be so constructive for our country.”

Incentives wanted

For the past year, speculation about where Micron would build was rampant, with some pointing to New York, North Carolina or even expansion in Boise. But the company zeroed in on rural Lockhart, which had an estimated population of 14,844 in 2022, according to the US. Census Bureau.

Micron is seeking Chapter 313 incentives. The tool has been used by numerous companies making large investments in Texas, such as Samsung and Tesla Inc. However, the program is set to expire at the end of 2022.

Micron is seeking to place a $20 million cap on the value of the land for maintenance and operations school taxes. This is just the application stage; no deals have been finalized and the incentives details are still subject to negotiations.

If Micron is ultimately approved for all eight of the incentives agreements, and the projects proceed as described, the company could save nearly $4.7 billion on its property taxes over the course of the agreements, which run from tax years between 2027-2052, based on an Austin Business Journal analysis of the applications. That’s according to projections of land values far into the future, so it’s a rough estimation, but it offers an idea of the immense value of the incentives.

The applications state that the Lockhart fabrication facilities would use a wealth of equipment, including air compressors, boilers, gas and chemical systems, chillers, scrubbers, laser markets, electrical infrastructure and more.

“Fabrication is the process of building circuits on a silicon wafer in a cleanroom environment where all aspects of production (temperature, power, chemistries, moisture, contamination, etc.) are tightly controlled,” the documents state.

On Aug. 8, Lockhart Independent School District trustees unanimously approved accepting eight Chapter 313 applications under the codename Project Evergreen. The district had discussed that project several times over the course of the last year but never previously taken action.

The school board members did not reveal the identity of the company behind Project Evergreen or any further details during the Aug. 8 meeting. But Lockhart ISD Superintendent Mark Estrada did release a statement Aug. 25:

“Lockhart ISD is honored to be considered for this opportunity. We genuinely feel that our innovative and excellent schools, as well as our growing community, would be a great fit for the leading-edge vision of Micron should they choose to locate in Lockhart,” he said.

In September 2021, Lockhart City Council gave unanimous approval for the Lockhart Economic Development Corp. to proceed with incentives discussions regarding Project Evergreen, but did not reveal more details.

Lockhart Economic Development Corp. Director Mike Kamerlander stressed in an Aug. 25 interview that the project is “not a done deal” and that the company and the city still have a lot of work left to do before it would become official.

“Good-paying jobs and a high-tech industry would be a positive for Lockhart and is certainly something that intrigues the city of Lockhart,” he said. “We certainly hope they choose Texas.”

And on Aug. 23, the Caldwell County Commissioners Court again discussed Project Evergreen in executive session. Following the one-hour closed door discussion, no action was taken. Officials did not immediately respond to a request for comment.https://cb80f5fd109793a031f2fe89c3802fc2.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html

Micron was also known to be looking at least one other location in the Austin area: Williamson County. Williamson County Judge Bill Gravell, the county’s top elected official who is involved in economic development negotiations, said the company has moved on from them, but that he’s excited that it still may stay in the region.

Even as the company stresses the deal isn’t done, Gravell expressed confidence it was imminent.

“What a great feat has been accomplished by Caldwell County to land Micron,” Gravell said. “The fact we can land a world-class organization in the region will make us all better.”

Critical time for semiconductors

The public acknowledgement of Micron’s plans in Central Texas comes at a critical time for the semiconductor industry. Geopolitical tensions and the coronavirus pandemic have created issues with the supply chain and prompted a push for more semiconductor manufacturing in the United States, where roughly 12% of the world’s semiconductors are made.

The Austin area has become a big beneficiary of that push. Suppliers including Applied Materials Inc. and Linde Inc. have proposed facilities near Taylor. Korean news outlets report that Global Standard Technology Co. Ltd., which makers scrubbers and chillers used in semiconductor plants, could also be on its way to Taylor. Valex Corp., a semiconductor supplier, is working on sites in both Round Rock and Georgetown.

In Austin, NXP Semiconductors NV and Infineon Technologies AG are considering new chip production facilities. LTD Material LLC, which makes specialized tools for chip manufacturing, is expanding its site in North Austin. And companies that aid in the supply chain are feeling the effects all throughout the metro.

Micron could soon be added to that list. The company, founded in 1978, invested $3 billion in research and development in its 2021 fiscal year. In a July securities filing, the company reported roughly 45,000 employees worldwide.

Micron already has an office in Austin off I-35 and State Highway 45, according to its website. It’s not clear exactly what operations are handled in the Austin office, although there are multiple job postings online for engineer positions.

Courtesy of Austin Business Journal. See the full article here.