[EXCLUSIVE] Taylor Mayor eyes Korea influx with Samsung's $17B chip plant arrival

The arrival of Samsung in Taylor, Texas, is expected to transform the city into a major hub for chip production and semiconductor ecosystem. We speak with Taylor City Mayor Brandt Rydell to learn more.

Taylor City Mayor Brandt Rydell poses with the head of Geumcheon District office when he visited Korea last year. [TAYLOR CITY OFFICE]

Named after a prominent railroad official, the U.S. city of Taylor in Texas used to be a cotton-producing town little known to many Americans as well as Koreans. However, it has become one of the most oft-cited regions in the far-flung Asian country’s media and industry landscape after a major investment decision by Samsung Electronics.

Taylor City Mayor Brandt Rydell is spearheading the dramatic transformation of the city with over 16,000 people toward an emerging chip manufacturing hub.

Samsung’s settlement in Taylor for its $17 billion chipmaking factory is considered the result of the U.S. government’s efforts to onshore chip fabrication plants with higher tax benefits and Samsung’s strategy to better cater to big U.S. clients like Qualcomm and IBM.

With the construction of the factory set to be completed this year, the city and Samsung have arrived at a critical juncture — whether the project will be navigated successfully or if it will falter, as demonstrated by the struggles of Taiwanese rival TSMC in Arizona.

The mayor affirmed that the Samsung project is on track as planned, lifting hopes of further future investment in the city.

"While Samsung has identified the potential for future investment at the Taylor site, there is only one fabrication plant under development by Samsung in our city," the mayor said in a recent e-mail interview with the Korea JoongAng Daily.

Samsung Electronics' new chip fabrication plant under construction in Taylor, Texas [SCREEN CAPTURE]

The entry of Samsung could lead to follow-up investments by the chipmaker’s suppliers and partners since it is customary for partnering companies to locate their factories close to large clients like Samsung.

"Our September trip to South Korea was an opportunity to engage with several Korean companies interested in investing in Taylor and the surrounding area," he said.

The hope is not completely groundless since the Korean chip giant consulted with the Texas state over tax breaks with the proposal of investing nearly $200 billion and building 11 new facilities, although Samsung remains tight-lipped about any future investment.

On the other side of the coin, however, the company has to deal with the rising costs of construction, difficulties in securing tax incentives initially promised under the CHIPS Act and talent acquisition and nurturing.

The following are edited excerpts from the interview.

Q. What does Samsung’s selection mean for the city of Taylor and you personally?

A. Taylor began as a railroad town, becoming a major hub for commerce in the early 20th century with an economy rooted in agriculture, principally cotton, making the city “the largest inland cotton market in the world.” With Samsung’s arrival, Taylor is now poised to transform once again into a major hub for commerce in the early 21st century with an economy driven by chip production and the greater semiconductor ecosystem.

What do you think are the key factors that brought Samsung’s chip manufacturing plant to your city?

I believe the major factors for Samsung’s selection of Taylor for this project were affordable and available land well-suited for development, access to an abundant water source, the ability to meet electricity demands, and the provision of an attractive tax incentive package by governmental entities.

Taylor and the State of Texas offer a variety of advantages for foreign investment, including a favorable business climate, a sizable and skilled workforce, multiple major university systems and educational partners within proximity to Taylor, high quality of life, access to growing markets, a central location making travel to the east or west coast of the United States efficient and convenient, cost of labor, and competitive incentive packages.

Aside from fabrication plant No. 1, it seems Samsung is planning to open a second plant in an adjacent area, according to Taylor Council Meeting agenda. Is this the second fabrication plant that Samsung proposed to build as part of the $200 billion investment? Or is this an expansion of the first plant?

While Samsung has identified the potential for future investment at the Taylor site, there is only one fabrication plant under development by Samsung in our city.

However, a promise I made to Samsung early in our negotiations was that Taylor would be a nimble and proactive partner, working to ensure success for both the company and our community. The City of Taylor seeks to be prepared for any eventuality with Samsung, and we try to anticipate and position ourselves accordingly.

Is the construction proceeding on schedule to be completed by the end of this year and up and running by 2024?

My understanding is that the Samsung Taylor fabrication plant should be operational by the end of the 2024 calendar year.

If the $200 billion expansion goes through, how big do you expect this project will actually be and how is the discussion going?

Currently, there is only one fab [fabrication plant] under development. The City of Taylor is hopeful that Samsung will continue its investment and development here, and we look forward to working with Samsung on its successful expansion in the future, if it decides to do so.

You have been involved in negotiations with Samsung on the mega chip plant. How did you pull off the negotiations and land a landmark deal that will change the landscape of Taylor once and for all?

Taylor was able to achieve success in landing the Samsung project through incredible teamwork involving various partners — the Taylor City Council and staff, the Taylor Independent School District, the Taylor Economic Development Corporation, Williamson County, the State of Texas, and the U.S. federal government, just to name a few.

It was truly a team effort. We undertook our negotiations and dealings with Samsung in the spirit of cooperation and collaboration, working toward the mutual benefit of all parties.

Recent media reports and a Taylor home page post indicate that inflation has led the investment size to increase from $17 billion to $25 billion. In this case, would the promised tax incentive go up accordingly?

Our incentive agreement with Samsung means that the City of Taylor will rebate a portion of the property taxes paid by Samsung based on the value of the finished development as assessed by the Williamson Central Appraisal District. It is difficult to estimate what that amount may be because the City of Taylor is not responsible for appraising the property and assessing its value for tax purposes.

You said you plan on visiting Samsung's Pyeongtaek plant soon. Have you decided a specific date or itinerary?

I have made two trips to Korea since last Spring with a third planned for late January in conjunction with SEMICON Korea trade show. I first visited in April to meet with Samsung’s leadership in Hwaseong, to tour the Samsung Pyeongtaek complex, and to visit with Pyeongtaek Mayor Jung Jang-seon and his staff.

Also during that trip the delegation from the City of Taylor met with various Korean companies interested in investing and developing in Taylor. I traveled to South Korea again in September along with a delegation from the Williamson County Economic Development Partnership representing Taylor and five other cities from our county. In coordination with Kotra, we presented a half-day seminar at the Kotra offices regarding “Doing Business in Williamson County, Texas” before an audience of more than 100 Korean companies.

During that trip, members of the delegation conducted one-on-one meetings with 35 Korean companies and engaged with staff from the U.S. Embassy in Seoul to discuss the Taylor project and the importance of relations between America and South Korea. I will be traveling to South Korea again in late January to attend SEMICON Korea.

Other than Samsung, many Korean parts suppliers and other chipmakers are planning to move into the city. Have other major Korean companies contacted the city regarding potential investment?

Our September trip to South Korea was an opportunity to engage with several Korean companies interested in investing in Taylor and the surrounding area. It was a very productive trip. Taylor continues to be contacted by several Korean companies with an eye toward development here, and we welcome and encourage the interest.

While Taylor has a primary focus on Samsung and its suppliers in further bolstering the semiconductor ecosystem, we and our partners with Williamson County are eager to engage with Korean companies from a variety of sectors, most notably automotive/electric vehicle, clean technology, software and life sciences.

TSMC’s plant in Arizona faces a wide range of challenges due to social and cultural differences. Do you anticipate cultural differences becoming a problem? Are you taking measures to smooth Samsung’s transition into the city?

Taylor has a history of diversity, with people from various cultures working to build our community into what it is today. However, there has not been a significant population of Koreans or Korean Americans in Taylor over the course of that history. Understanding that will be changing quickly with Samsung’s arrival, city leadership has placed a priority on bridging any cultural divides.

To that end, the City of Taylor has established friendly and cooperative relationships with both Pyeongtaek and Geumcheon-gu. My three visits to South Korea within the span of 10 months is an indication of the City of Taylor’s interest not only of engaging economically but also culturally with South Korea. As a community we look forward to finding ways to bring our two cultures together as we celebrate our commonalities and cultivate an appreciation, understanding, and respect for our differences.

As noted previously, Samsung has already done an incredible job of introducing itself as a valued corporate citizen and community partner, and we look forward to building upon those initial positive impressions.

Can we have details about Taylor’s cooperative relations with Korean locations like Pyeongtaek?

Because of the Samsung project, the City of Taylor is welcoming more residents and visitors from the Republic of Korea, and because we work hard to be a welcoming, inclusive city it is important to me, my fellow council members, and our City staff that we have a knowledge and understanding of Korean culture. So we take every opportunity we have to visit cities in Korea to learn more about our similarities and differences.

As you noted, Pyeongtaek is similar to the City of Taylor in that we both are homes to the largest Samsung fabrication plants in our respective countries. We were privileged to spend some time there when we visited Korea earlier this year. The Taylor delegation met with Mayor Jung and his staff, and we toured the city and learned more about how they work with Samsung. We don’t have a formal relationship with Pyeongtaek, but we continue to be in communication with them and look forward to expanding our relationship with Pyeongtaek in the future.

Earlier this year the Consulate General of the Republic of Korea in Houston, Texas reached out to me and requested that we accept the invitation from Geumcheon-gu to be a Sister City to Taylor. We were happy to honor the request, and in November of this year we welcomed Mayor Ryu Sung-hun and his delegation to Taylor, giving them a tour of the city and introducing them to our school district, economic development corporation, and various highlights of the city. During their visit, we signed a formal Memorandum of Understanding with the district indicating our willingness to engage with them in a cultural exchange.

What social contributions has Samsung Electronics made in Taylor?

Samsung has proven to be a valuable corporate citizen and community partner for the City of Taylor. In the short time since Samsung selected Taylor as the site for this critical project, Samsung has enriched our education system by contributing $1 million to support the Taylor Independent School District’s Career & Technical Education Center, providing 24 paid summer internships to Taylor students each of the last two years, and funding a program supporting teacher innovation in Taylor schools, just to name a few examples.

Samsung has further contributed $1 million to local charities to address food insecurity, mental health, youth programs and education. Additionally, Samsung has made annual payments of $150,000 both to the City of Taylor to help fund quality of life improvements in the community and to a variety of charitable organizations serving the residents of Taylor. This is just a sample of the many ways Samsung has invested itself in the social fabric and well-being of Taylor in the last two years.

Acquiring sufficient talent might be the top priority for Samsung in running the fab. Is there any support program or funding run by the city designed to help Samsung hire or train engineering talent for future employment?

The City doesn’t directly fund any training programs, but we do support the workforce development efforts of Temple College, which has a campus in Taylor, and the Taylor Independent School District. The Taylor EDC is also working with local partners, including the Texas Workforce Commission, to address workforce and training issues.

BY PARK EUN-JEE, JIN EUN-SOO [park.eunjee@joongang.co.kr]