Proposed Hutto Applied Materials Site Could Get $100 Million in Tax Breaks

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Applied Materials could be in line for more than $100 million in tax breaks for a proposed $2 billion research and development facility the technology company plans to build in Hutto.

An incentive agreement with the Hutto Independent School District could save Applied Materials nearly $38 million in property taxes over 10 years, according to documents filed with the Texas Comptrollers Office.

With the City of Hutto already considering an incentives deal worth up to $80 million, this would bring proposed local tax relief to approximately $118 million if those deals are finalized and Applied Materials selects Hutto as the project site. .

Applied Materials is also in talks for a possible incentive agreement with Williamson County and plans to apply for a grant from the state-run Texas Enterprise Fund, according to documents filed with the comptroller’s office.

Applied Materials, which is based in Santa Clara, Calif., and has a manufacturing center in northeast Austin, is one of the world’s largest providers of manufacturing equipment, software and services for the semiconductor industry.

After:Tech firm Applied Materials eyes Hutto for $2.4 billion facility and hundreds of jobs

The company said in April it was considering a site in Hutto for the proposed facility, but at the time revealed few details about the scope of the project. This week, an inducement request filed with the comptroller’s office revealed new details about the facility, which the company said would “favor the state of chip manufacturing.”

Applied Materials plans to invest about $2 billion in the project and would create 525 jobs over the next 12 years, according to the documents. The facility would include research and development operations and a manufacturing plant designed to be an innovation center for the company, according to the documents.

The company said it has a non-binding letter of intent to purchase over 400 acres from Hutto southwest of FM 3349 and US 79. If Hutto is selected, construction would begin in early 2023 and be completed around mid-2026, with operations starting late that year. .

The application says the company is also considering sites in Arizona, New York and California for the project.

“In the future, the critical role of semiconductor chip technology will only grow. The future for the industry and the company is bright as Applied will continue to drive the technologies that make new innovations possible,” the company said in its application. “To enable this future, Applied is planning a major expansion and upgrade of its R&D and manufacturing infrastructure.”

After:Even without firm plans, Samsung is looking for new incentive deals for Austin and Taylor sites

Applied Materials plans to build an 849,000 square foot research and development and manufacturing facility in Hutto, near FM 3349 and US 79.

Dealing with the school district

In April, members of the Hutto School District Board of Trustees voted to formally consider the request for the incentive.

The proposed deal goes through the state’s Chapter 313 incentive program, under which school districts are authorized by the state to provide tax breaks to businesses for major economic development projects.

The proposed agreements are analyzed by the Office of the State Comptroller. If approved by the Comptroller’s Office, the Applied Materials Agreement will return to the Hutto School Board for final approval. The Applied Materials application estimated that a final agreement with the school district could come in the fourth quarter.

Speculation about the proposed project has been circulating since the beginning of this year. In late January, Hutto town officials met with an “Acropolis project” seeking tax breaks, but they did not reveal the name of the company, which they said was an industry manufacturer. semiconductors involved in the design and manufacture of components. for electronics and said the company is looking to build the facility on a 450-acre site. Officials from Hutto’s economic development agency estimated that municipal tax incentives for the project would be approximately $80 million over 10 years.

In a written statement to the American statesman, Hutto town officials said there were “several major commercial projects in advanced stages of the approval process to potentially come to Hutto,” but declined. to comment further, saying “we cannot comment on any of these major proposed projects at this stage of what is often a lengthy and dynamic site assessment process.”

Applied Materials’ proposed Chapter 313 agreement with the school district would cap the assessed value of the company’s Hutto project at $80 million between 2027 and 2037. This would save the company about $37.85 million dollars in property taxes over the 10-year period.

Applied Materials’ plans call for an 849,000 square foot facility with state-of-the-art development labs and manufacturing facilities that the company says would house its next-generation research and development, manufacturing and ” driver of innovation”.

Plans include expansion of research and development and prototyping facilities, manufacturing, and a second major research and development laboratory. The project is also designed to complement and replace Applied Materials’ operations at its Maydan Technology Center in Silicon Valley, which the company said was close to service capacity. The Hutto site would also enable a potential range of uses related to semiconductor equipment and components such as assembly, testing, manufacturing, storage, kitting and design.

“With these next-generation facilities, Applied will establish a new, enduring platform of technology leadership to advance the state of chip manufacturing,” the company said in its application.

The company said jobs at the site would be in a range of positions, including management, engineering, finance and operations. The jobs are said to have an annual salary of around $69,000.

After:Chipmaker Infineon eyes $700 million expansion at Austin site

The proposed project would add to the company’s already significant presence in central Texas.

Applied Materials operates a North Austin offshore US 290 manufacturing facility that employs approximately 2,500 workers and was recently expanded to include a logistics service center, adding a 729,000 square foot building with warehouse and office space . The company also has a facility in northwest Austin that houses various operations, including an information technology unit and a data center.

The proposed Hutto project comes amid continued shortages of chips used in various technologies, from cars to laptops, and as semiconductor companies eye unprecedented investments in the United States, including Texas.

Congress has worked to provide federal funding to encourage semiconductor companies to invest in the United States, and Sen. John Cornyn, R-Texas, co-authored the CHIPS for America Act, a bill bipartisan on technology and manufacturing that was passed by the Senate, designed to help strengthen the country’s ability to compete with China.

In its Hutto application, Applied Materials highlighted the need for local incentives to qualify for CHIPS Act funding. The bill requires companies to have matching with state or local funding, such as the Chapter 313 program.

“The Biden administration’s planned $52 billion investment in the U.S. semiconductor ecosystem, also known as the CHIPS for America Act, will be a key impetus for Applied’s expansion into the United States. United,” the company said.

A deadline is approaching for companies to apply for Chapter 313 agreements in Texas. The program is set to expire at the end of this year after state lawmakers refused to renew it in last year’s legislative session. But the agreements concluded before the end of the year can still enter into force.

After:For Austin expansion, NXP seeks up to $140 million in tax relief from school district

Applied Materials personnel work at the company's Austin facility in this 2007 file photo. Applied Materials, which employs about 2,500 people in Austin, is considering a site in Hutto for a new 2 billion that could employ up to 525 people, according to documents filed with the state.

Added to Technology Expansion

The project proposed by Applied Materials joins a growing list of expansions and projects proposed by semiconductor companies in recent months for central Texas, which is already a hotbed of semiconductor activity.

In November, Samsung announced it would build a $17 billion chip factory in Taylor. The company has also filed new Chapter 313 petitions in Austin and Taylor with no firm plans that leave open the possibility of expansion at its two locations.

NXP Semiconductors is considering two projects as part of a potential expansion in Austin, estimating the investment required for one of them at around $2.6 billion and for the other up to $1.2 billion. , and chipmaker Infineon has filed a Chapter 313 petition with the Del Valle Independent School District for a potential $700 million expansion at its current semiconductor manufacturing campus in southeast Austin.

The facilities would add to the Austin area’s existing stronghold for the semiconductor, computer and peripherals industry, which employs more than 20,000 people in the region, according to the Austin Regional Manufacturers Association. Semiconductors account for about a quarter of manufacturing output in all of central Texas.


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