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Rep. McCaul believes Samsung could be first of new wave of semiconductor investments in Central Texas

Samsung announced a new semiconductor manufacturing facility would be built in Taylor starting in 2022, with production predicted to start in 2024.

TAYLOR, Texas — A week after Samsung announced it would expand and build a new semiconductor manufacturing facility in Taylor, U.S. Rep. Michael McCaul (R-Austin) sat down with KVUE about the progress and announcement.

McCaul has long been a proponent of semiconductor manufacturing, helping write and introduce legislation in 2020, named the CHIPS for America Act, to bolster efforts to make more of the electronic chips.

Mike Marut: Let's just start real easy – with Samsung choosing Taylor, how you doing?

Rep. Michael McCaul: Well I think it's great for Central Texas and, and we were happy they chose to expand in Texas. I know they were looking at Arizona and New York. But I think what's interesting is that, you know, the CHIPS for America Act that I introduced bipartisan with [U.S. Sen. John Cornyn (R-Texas)] in the Senate has really laid kind of the foundation for these expansions. We're seeing you know, Samsung, $17 billion. And that's just the start of it. I think you're going to see probably over time close to maybe $100 billion. And what's a very small town, Taylor, but it's going to be a bigger town I'm sure. But you're also seeing other companies like Intel, based upon the optimism that, you know, we got CHIPS for America authorized on the National Defense Authorization [for fiscal year 2021]. It's very important for our national security to have these advanced semiconductor chips manufactured in the United States. But that's given them the optimism to invest in the U.S. Expansion from Intel, IBM are looking at a $20 billion investment in the United States. I know [Micron Technology] is doing the same. Many of them are all looking at the Austin area as a place to to do business.

Mike Marut: Speaking of the CHIPS Act, you introduced it – or it was really introduced last year and passed last year, the funding finally approved at least in the Senate back in July – what are we waiting on?

Rep. Michael McCaul: Well, it's going to happen. I, and the reason why I'm so optimistic is, you know, in a town where you see a lot of acrimony, this is probably one of the most bipartisan bills that we've seen this Congress. And it probably has, well, significant impact on the future of our country, both economically and from a national security standpoint. I mean, it's supported by you know, not only Republicans like me, but I introduced it with a Democrat from Silicon Valley, and you get the [Speaker of the House Nancy Pelosi (D-California)]'s support. You also have you know, obviously Sen. John Cornyn, you have Rep. Kevin McCarthy (R-California), the leader, supportive, and then Rep. Chuck Schumer (D-New York) with Global Foundries in New York is very supportive. We had a meeting in the White House, the Oval Office, with the president of automotive manufacturing, members of Congress and technology ones like myself. There were eight of us, and the president was very excited about it, very supportive. So I think just given that level of support – we just recently had a letter signed by the top CEOs of 100 technology companies and House and Senate leadership calling upon the passage. You know, we pass this authorized on the National Defense Authorization, the tax incentives, which I think are very, very important for certainty down the road, will be passed through reconciliation. And then, and we believe the funding piece is going to pass. There are several vehicles, but we feel very optimistic.

Mike Marut: Speaking of that optimism, how does this impact the short-term future for other investments? I mean, Samsung's a huge company that made this decision.

Rep. Michael McCaul: Well, you know, their original operations are in my district in Austin. They expanded just north, you know, of Austin. Seventeen billion dollars will be the largest foreign direct investment in the United States, and really one of the largest investments in semiconnectors. Intel, well, is $20 billion. And so I think it's really it's showing that Central Texas, Austin's, a real key player and it has been in technology, a leader, and that with the CHIPS for America Act, the optimism around that, plus sort of the business-friendly environment in Texas, you're going to see, you know, a lot more of these technology companies locating in the Austin area. And I think it's very exciting because it'll create a lot of jobs and opportunity for the economy, from my perspective, with my foreign affairs hat, it, it also protects our national security. Now these chips are the brains in everything from your phone to the most advanced weapons systems. When we saw China fire off the hypersonic missile – that is more advanced than what we have, and we can't stop it with our missile defenses. We have to, we have to provide that technology here where it can't be compromised by China. That launch of the hypersonic is a real wake-up call, I think. And it was really built on the backbone of American technology. And so I, that's, that's really the way this whole thing started was in the previous administration. I had the [Former National Security Advisor Robert O'Brien] come to me and talk about moving Taiwan Semiconductor Manufacturing Company out of Taiwan, where 90% of these advanced chips were made, into Arizona. And then I talked with [Former Secretary of Commerce Wilbur Ross and Former Secretary of State Mike Pompeo], I talked to the semiconductor industry about, 'What do you need to incentivize you to expand and invest either in the United States or with our allied nations?' And that's how we came up with the draft, the language that then was eventually passed on the NDA, the CHIPS for America Act.

Mike Marut: Speaking of tax incentives, obviously Taylor gave a lot of incentives for Samsung to move in there. Is there ever too many incentives? Is that, is that within the realm of possibilities that whether it's a town, a county, et cetera, goes too far with incentives where it maybe doesn't help as much as they hope it does?

Rep. Michael McCaul: Well, I, I think from an economic standpoint it's very good. I mean the largest tax receipts for Travis County come from Samsung in Austin. So it, it brings revenue in, brings jobs and opportunities. But I do think, you know, you're correct. I mean, this is not the normal. This is what they call industrial-based economics. We're trying to compete with China that's throwing a trillion dollars in our digital economy. To be competitive, this is kind of creative thinking that we have. I think the tax incentive is, was important, and the grant program as well, but I don't think you want to do that for every business. The reason why we did it in this case is because advanced semiconductor chips are so important to our national security apparatus, to our Pentagon, our advanced weapons systems. You know, you've got the Army Futures Command in Austin. This is very important to them, you know, as well. COVID was an eye-opener that we're too reliant on supply chain and medical, rare earth mineral and advanced semiconductor chips. And so I think this model could apply for all three of those very, very important sort of national security related items to compete globally and protect our national security. I wouldn't apply this model to just any type of business.

Mike Marut: And you've been spearheading the CHIPS Act, you know, and semiconductors for a long time. Did you work closely with Congressman John Carter (R-Georgetown) about this as well, just at least, you know, provide additional background information, given your knowledge base?

Rep. Michael McCaul: He's the beneficiary of the new expansion and Taylor. And we could talk about how that all came to be, but yeah, he's on House Appropriations Committee and, you know, that's going to be a very important. I mean, eventually this $52 billion grant program's going to pass on the appropriations bill. There's also a conference committee I'm on that involves what's called the Endless Frontiers that passed out of the Senate with the grant program with Science and Technology and Foreign Affairs committees. And with the CHIPS act that I'll be participating, we think that could be a vehicle for the grant program. But the good news is I think the tax incentives are well on their way to passing and for, you know, the business community, they need that kind of certainty in the marketplace. These fabrication plants are very capital intensive, very expensive. And when they're offered subsidies from other countries, we got to be able to compete with them on that. And this will help them in about 40% of that capital cost to build the fabrication plant. So I think it's a great advance for science, technology for national security, and for our economy.

Mike Marut: It's a whole rural community that's going to be reaping the benefits of this. How far do you see those benefits stretching?

Rep. Michael McCaul: Well, I think the economic benefits certainly cross the county line into Travis County and, and into Austin. I would have preferred it, they could have expanded where they were located. I just think they got better, a better offer, you know, from our county to the north. But I think overall it's great for Central Texas. It means that Travis County is going to benefit greatly economically, you know, from this expansion. And, you know, it's important to know it's just the, the very beginning. I mean, the $17 billion largest foreign investment in the United States, but that's just kind of like seed money right now. You could see that it could grow as large as $100 billion over time. And then when you look at a forced multiplier of Intel looking at Austin to do their fabrication, plants, and Micron, these are some of the largest semiconductor manufacturers in the country, if not the world

Mike Marut: The infrastructure bill that passed in the Senate, how does that play into building around [Samsung]?

Rep. Michael McCaul: Well, right. So we, you know have a lot of money to appropriate and now that's the role of members of Congress is to make sure that, that money gets back to the state of Texas and back to our districts. And, and so I, I think, look, Taylor's going to need a lot of infrastructure improvements. And I think Samsung's going to put a lot of money into that as well. I mean, the great thing about Samsung's going to help with local education, with the infrastructure. And then we also have the infrastructure bill itself. Austin clearly needs a lot of that money because we have to improve our road systems. Traffic's getting worse, not better. And, and so, you know, I'll be working with my colleagues in this area to get that money, you know, back to the Austin area you know, and get the infrastructure where we need it.

Mike Marut: On top of that, not just the physical infrastructure of roads, electric, water, et cetera, one of the challenges that I've heard from various manufacturers is really about housing. Is there anything on the horizon from the federal government to assist with housing infrastructure, whether it's helping build neighborhoods or what have you?

Rep. Michael McCaul: You know, I think there are some opportunities in the infrastructure bill to look at that. And I think affordable housing around these massive manufacturing plants is important. I think, you know, you got Tesla, Elon Musk, you know, and I know he's been more in, but some of that's borne by the private sector as well. And I know in the case of Tesla, they're also looking at bearing some of the burden, you know, cost-sharing of that. I'm very interested in that one as well because these batteries that they use in electric vehicles are primarily bought out of China out of the Xinjiang province, where they commit genocide with forced slave labor. Not only advanced conductor, but rare earth minerals, critical minerals have been harvested by China with Belt and Road Initiative in South America and in Africa taken to China and then the batteries are made there. It seems to me a better idea, and from a moral standpoint, too, not to support a nation that commits genocide. As to why not have those rare earth minerals, why not have those batteries manufactured either in the Austin area or perhaps in Central America or Latin America where it logistically it makes sense, but it also helps with our migration issue?

Mike Marut: Is there anything, anything else you wanted to add about Samsung's announcement last week? 

Rep. Michael McCaul: Well, I think you're going to see, I mean, Austin's already at the technology hub, but I think you are seeing a lot of California companies expanding into the Austin area. And I think what I'd like to see is that it become a semiconductor manufacturing hub. That would be, that would be ideal and it's a perfect place to do it. And again, that's just, it's, it's great for advancements and technologies. It's great for the nation in our international security as well.

Mike Marut:

All right. Well, thank you so much, Congressman.


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