The Samsung Effect

Posted on 11/30/2016 by Austin Chamber of Commerce

  • $16 billion investment in Austin
  • Generates $3.6 billion in economic activity for the region
  • Over 10,000 jobs supported by Samsung
  • Impact to Austin region goes beyond economic benefit

Edward Lorenz spent a lifetime studying mathematics, meteorology, and chaos theory. In particular, he pioneered research examining how a small change in a deterministic nonlinear systems can result in a chain reaction that creates large differences in a later state. His often-cited favorite example on this phenomenon was how the flapping of wings from distant butterflies could influence the trajectory of a hurricane oceans away - a very small change in initial conditions causing significantly different outcomes - today we refer to his model as the Butterfly Effect.

Breaking Ground in North America

Across another ocean in a completely separate environment, not a laboratory per se, but in a series of corporate board rooms in Seoul, South Korea, Samsung executives examined their own set of research, charts, and empirical data. A growing company expanding exponentially, Samsung had a decision to make on where to establish operations in North America for semiconductor manufacturing. Seeking a location that provided economic incentives, sensible regulations, and an environment that would provide a foundation for long-term success, Samsung ultimately chose Austin.

In 1996, Samsung broke ground in northeast Austin with an investment of $1.4 billion. Providing an initial commitment to hire 700, the facility grew so quickly the job count rose to 1,600 by 2007. Benefiting from Austin's generous business environment, the company continued to expand and built on its success. In 2007 they constructed a $3.5 billion campus making the Austin location the largest foreign investment in Texas and one of the largest single foreign investments in the United States. Former Governor Rick Perry and Samsung Electronics Vice Chairman and CEO, Jong-Yong Yun were on-hand to welcome the expansion. Dr. Chang-Gyu Hwang, president of Samsung Electronics Semiconductor Businesses observed, "Samsung's investment in Austin is both a statement of our faith in the Austin community and its human resources, but also a testament to the work and energy of our current work force which has proven that we can compete in a global market in Austin, Texas."

The economic impact of Samsung Austin Semiconductor is nothing short of phenomenal. To date, SAS has pumped $3.6 billion into the regional economy and supports a total of 10,755 jobs in the area which includes $498 million in annual salaries. Most recently, Samsung Austin announced plans to invest an additional $1 billion and create hundreds of new jobs here in 2017. Samsung's contribution is further illustrated in how they support and fund our region's tax base:

Annual taxable sales supported in Austin $186,672,995
Taxable value of property on local tax rolls supported by the facility and its direct & indirect workers $3,700,629,921
Lodging sales at local hotels $24,383,835
Number of residents supported financially wholly or partially by the facility 24,468
Number of school children in Manor ISD who live in households of the facility's employees and indirect workers 129
Net property tax for 2015 (largest taxpayer in the state for 2014) $21,612,141

*Impact Data Source Economic Impact Study

Investing in local education, communities

While proving to be an economic tsunami, Samsung understands the value of giving back to the community and investing in students, community initiatives, and educational programs. Since 2010 SAS has contributed over $7 million to Austin charities and assistance programs. SAS also is proud that 70 employees work as mentors to at-risk youths in Manor ISD schools, as well, they invest heavily in STEM education programs, Science, Technology, Engineering, and Mathematics. Furthermore, Samsung contributed $150,000 in a joint program with the Colorado River Alliance to create a mobile classroom which serves students throughout the region.

Over twenty years ago an empty field in northeast Austin - just inside City Council District 1 - lay dormant and hollow. The vast emptiness is now occupied by thriving, successful, and generous Samsung Austin Semiconductor. The key decisions to draw Samsung to Austin, to attract their talent, investment, and development, and then experience a wave of monumental economic growth, colossal job creation, alongside massive contributions to our public sector and educational institutes can be fairly described as the Samsung Effect.

Opportunity Realized

Opportunity Austin's commitment goes beyond the initial opening of a business's doors, but we work to keep regulations at a minimum, taxes reasonable, and the incentive to hire more people to meet the growing demand.

Related Categories: Economic Development