Texas Instruments Selects Sherman Texas For New $30 Billion Dollar Semiconductor Chipmaking Campus

Dallas-based Texas Instruments is betting big on American-made chips, with an ambitious plan to invest up to $30 billion to build as many as four new semiconductor fabrication plants in Sherman, Texas...

TI said Wednesday it will begin construction next year on the first two plants producing its 300-millimeter wafers used in everything from cars and trucks to industrial machinery. It estimates chip production will start by 2025.

Two additional plants could be added at the 4.7 million-square-foot site in Grayson County to meet future chip demand. The company said the plants could employ as many as 3,000 workers when complete.

“Sherman provides some unique advantages such as a competitive business environment, access to a highly trained technical workforce and an existing supplier base,” TI senior vice president of technology and manufacturing Kyle Flessner said in a statement. “The proximity to our other manufacturing operations in Dallas and Richardson will help us further scale our efforts and build on operational efficiencies as we expand our 300-millimeter manufacturing presence in North Texas.”

In exchange for selecting Sherman, TI will receive sizeable tax breaks from local governments, including the city, county, Grayson College and Sherman ISD, according to The Herald Democrat.

The city of Sherman and Grayson County are each offering a 10-year, 90% property tax abatement for each of the plants, after which the company will receive a 20-year rebate on 90% of each plant’s property taxes. Grayson College will offer a 10-year, 50% tax abatement for each of the plants. And Sherman ISD is offering a 10-year cap on property tax revenues under Texas’ Chapter 313 tax code, which allows large corporate projects to limit the taxes they pay to local public school districts.

The project could add billions to the tax base of the city of about 44,000 residents, according to officials.

“It’s easy for your eyes to get crossed on the $30 billion but there’s going to be a very large impact, we believe, on other businesses that may be vertically aligned with TI — suppliers or customers — that want to be close to this plant and will be looking to relocate to Sherman,” Hefton told The Dallas Morning News on Wednesday. “And we’re prepared for them as well.”

Sherman Mayor David Plyler put an even finer point on TI’s decision. ”We thank God that Texas Instruments has made the decision to locate in our growing, historic and business-friendly community,” Plyler said.

Texas Gov. Greg Abbott celebrated TI’s decision to locate the plant in North Texas. ”In addition to bringing billions of dollars in capital investment and thousands of new jobs to North Texas, this historic investment will keep Texas a national leader in semiconductor manufacturing while also strengthening the domestic semiconductor supply chain,” Abbott said in a statement.

Texas Instruments, which traces its roots to 1930, has operated a plant in Sherman for decades, but that plant and another in Dallas are in the process of being closed down as the company moves toward producing a more high-tech version of the wafers made at those sites.

It’s also nearing completion on a new $3.1 billion semiconductor plant in Richardson next to an existing TI facility off Renner Road. Company executives have said that plant could bring in $5 billion annually in additional revenue.

In terms of the size of the potential Sherman investment, no currently planned project in Texas comes close to TI’s $30 billion estimate. Samsung is considering a site in Williamson County near Austin for what’s expected to be a $17 billion semiconductor plant.

TI’s announcement Wednesday isn’t a total surprise. The company said in August that Sherman and Singapore were contenders for the new plants to produce more cost-effective chips because the next-generation 300-millimeter wafers can yield twice as many.

The new sites in Sherman and Richardson are expected to help TI gain greater control over the global supply chain, which experts say has been severely strained by the COVID-19 pandemic.

Industry experts expect the chip shortage causing supply issues for products ranging from new vehicles to computers could drag out until 2023.

TI has been blamed by other chipmakers for not expanding its production quickly enough, partially contributing to the global shortage of computer chips. Taiwan Semiconductor Manufacturing Co. cited an insufficient supply of TI’s wafers as one bottleneck, according to Taipei-based industry publication DigiTimes.

On its most recent earnings call, TI said it, too, is facing a shortage in parts used in making its chips. Its third-quarter revenue of $4.64 billion came in below market expectations as the chipmaker struggled in recent months to keep up with demand.

TI president and CEO Rich Templeton said in a statement that the new fab plants in Sherman are part of the company’s strategy “to strengthen our manufacturing and technology competitive advantage and support our customers’ demand in the coming decades.”

TI has taken its time ramping up production because it wasn’t certain the higher demand for chips would stick around, according to Bloomberg Intelligence Analyst Woo Jin Ho. Peer companies are increasing investment in new plants between 25% to 50% on an annual basis, Ho said.

“So now it’s starting to become not only a capacity growth issue but also a potential market share issue,” Ho said.

In June, TI spent $900 million to buy Micron Technology Inc.’s semiconductor factory in Lehi, Utah. It became the company’s fourth 300-millimeter wafer facility.

“While there is a growing recognition that the near-term supply demand imbalance will end at some point, the secular growth of semiconductor demand will continue to grow and this requires a robust manufacturing capacity roadmap for 2025 and beyond,” TI’s investor relations chief Dave Pahl said in a call with analysts and investors in late October. ✪