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With Ti’s Detailed Plan to Invest Billions in American Semiconductor Chip Production Through 2030

Texas Instruments announced plans Thursday to invest $3.5 billion yearly in its semiconductor chip manufacturing operations in the United States through 2025, as manufacturers grapple with a global shortage of the technology required for an increasing number of items.

The sum for near-term investment represents a significant increase above the amount spent on capital expenditures by the corporation in recent years. Furthermore, the business stated that it will continue to invest in its production to the tune of 10 percent of yearly revenue from 2026 to 2030.

“It is becoming increasingly evident that the secular increase of semiconductor content will continue for at least another 10 to 15 years,” said Rafael Lizardi, the chief financial officer of the Dallas-based chipmaker, during a presentation to analysts and investors.

The company anticipates that its investment plans will enable revenue growth of 7 percent per year until 2030 and beyond.

A significant portion of its manufacturing growth will take place in Sherman, where it aims to begin construction on two of its four factories this year. TI aims to finish construction on the first two factories by 2025 and to begin manufacturing at the first facility in 2026.

“The second one, with greater investment, can be ready for production not long after that,” Lizardi said, declining to give a specific start date for the second project.

The company has previously stated that it intends to increase the number of factories at the site as necessary to meet the demand for its chips, but it announced Thursday that construction on a third and fourth plant would begin between 2026 and 2030, with the third plant expected to be completed by 2030.

As soon as the Sherman facilities are fully outfitted and operational, Lizardi estimates that each will generate $5 billion to $6 billion in revenue for the corporation each year once fully operational.

After initially announcing its intentions for the four new facilities in November, the business has now provided additional information about the site for the first time since then.

To be fully developed, TI’s investment in the Sherman campus will be in the neighborhood of $30 billion, ranking it as one of the greatest corporate investments in the history of the state.

A tax incentive plan that effectively exempts TI from paying 90 percent of its property taxes for the first 30 years has been authorized by the local governments of Sherman and Grayson County to entice the American semiconductor giant to reinvest in the local economy. It is estimated that when completed, the plants would provide 3,000 jobs, and they are already stimulating economic development in the surrounding area.

TI has had a manufacturing facility in Sherman for decades, but that facility, as well as another in Dallas, will be closed when the business transitions to making 300mm semiconductor wafers, which are a more high-tech and cost-effective version of the company’s prior goods.

The completion of TI’s fabrication operations in Sherman, Richardson, and Lehigh in the state of Utah, as well as a facility in Malaysia, will give the business a total of eight factories generating 300mm wafer technology, according to Lizardi.

Last week, TI presented its final 2021 financial statement, which exceeded expectations in terms of profit and sales. The company ascribed the increased revenue to increased demand for its products in the automotive and industrial sectors, where it wants to place a “strategic priority.”

TI’s analog and embedded chip technology, which is used in many automotive applications, is becoming increasingly popular. This includes entertainment, body and lighting, and safety systems, all of which are driven in part by TI analog and embedded chip technology.

Governor Greg Abbott praised the investment, saying it will “keep Texas a national leader in semiconductor manufacturing while also strengthening the domestic semiconductor supply chain.”

TI did not receive any state incentives from the Texas Enterprise Fund for its Sherman plants, but the governor did celebrate the investment, saying it will “keep Texas a national leader in semiconductor manufacturing while also strengthening the domestic semiconductor supply chain.”

Specifically, the Biden administration is supporting the CHIPS Act, which is meant to boost the competitiveness of the United States in the semiconductor manufacturing business. The United States issued a warning last week, claiming that an “alarming” shortage of chips was contributing to the unprecedented inflation that is hitting consumers.

Elizabeth Lizardi, president, and CEO of Lizardi & Associates said the company’s investment plans for the next decade or more do not take into account any incentives it might receive as a result of the legislation, but that those incentives could potentially subsidize some of the company’s planned expenditures.

In the United States, “we certainly support legislation that will help the semiconductor industry’s ability to be competitive and to compete on a level playing field,” Lizardi added. “In general, I believe that the most effective way to accomplish this is through a competitive tax rate.”

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A total of around $80 billion in semiconductor manufacturing investment has been disclosed by chip makers since the beginning of last year, including TI’s Sherman campus, according to the White House.

More than half of that investment is destined for Texas, which has the potential to serve as a sort of “ground zero” for a significant increase in domestic semiconductor chip manufacture over the next 10 years. Samsung said in November that it will develop a $17 billion plant north of Austin to serve the needs of the company.

Intel has announced the construction of a $20 billion chip facility south of Columbus, Ohio, with additional facilities planned for New York and North Carolina.

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