NXP considered for tax rebates in rare Austin incentives deal – The Business Journals
Listen to this article 4 min
In the first public discussions of possible incentives for NXP Semiconductors NV, Austin City Council responded with enthusiasm during a Sept. 12 work about possible tax rebates for the chip manufacturer. That hasn't been par for Austin City Council's course in recent years. The company is asking for about $1 million in order to invest nearly $300 million in new equipment and create an estimated 50-plus jobs. Click through for the latest.
In the first public discussions of possible incentives for NXP Semiconductors NV, Austin City Council responded with enthusiasm during a Sept. 12 work session about possible tax rebates for the chip manufacturer.
Warming up to incentives for a big company hasn’t been par for Austin City Council’s course in recent years.
NXP USA Inc., a subsidiary of the Netherlands-based NXP (Nasdaq: NXPI), hopes to obtain about $1 million in tax rebates as it considers investing $291 million in its two Austin campuses, replacing four of its five production lines with more modern products. That would create an estimated 53 jobs.
Council members did not express outright objections to the request. Some pushed the company to consider the child care needs of employees.
Council on Sept. 14 could take an initial vote on the incentives package, with a second vote possible Sept. 21. If approved, it would be the first time Austin has inked such a deal in years, perhaps signaling more incentives-friendly leadership at City Hall. Council members noted at the work session that this deal could set a precedent for future agreements.
“It is rough being the first,” Mayor Kirk Watson told representatives of NXP during the meeting. “There has not been an agreement like this in seven years now. This is one of those specific areas where we might be able to set a real example. Particularly, as we talk about how we incentivize, we want to set an example. We want Austin to be seen as somebody that is seen as willing to work with industries like yours. At the same time, we have some specific needs in Austin, and that is what we are attempting to address.”
The incentives agreement, proposed through the state’s Chapter 380 program, would allow NXP to receive about $1 million in rebates on corporate personal property taxes over five years — the company would need to hire economically disadvantaged workers and meet sustainable business practices to get all of the incentives.
Additionally, if NXP secures the local incentives, it would unlock the possibility of tens of millions of dollars in federal incentives through the CHIPS for America Act. NXP could leverage $15 million to $45 million in federal funding, according to Austin’s Economic Development Department, equating to about 5% to 15% of the total cost of the project.
The last Chapter 380 deal inked by Austin was with Astute Electronics in 2020 for a $1.5 million expansion by the component engineering firm, according to the city’s online incentives database. The city also signed a couple in 2019 but the last deal with a major corporation was in 2017 with drugmaker Merck; the company in 2019 pulled out of the deal, citing slower hiring than expected.
Council Member Vanessa Fuentes led the board in encouraging the expansion of child care services offered by the company’s two Austin facilities.
“I would encourage NXP to work with local stakeholders to better understand our child care needs and the landscape that we have when it comes to child care accessibility,” she said. “I think those conversations would be illuminating as to what more could be done in addressing this community need that we have.”
The company employs 2,768 people between the two sites, with 1,062 in East Austin at 3949 Ed Bluestein Blvd. and 1,702 at 6501 W. William Cannon Dr., in the Oak Hill neighborhood of Southwest Austin.
Philippe Montillet, NXP’s human resources lead for the Americas, said the company is cognizant of employees’ child care needs — while it does not offer the services on-site at either location because of safety concerns, NXP has established partnerships to ensure there are child care centers in close proximity to both.
“That is still something that we are very dedicated to our employees about,” Montillet said.
The Economic Development Department has recommended the incentives. Last year, the Austin Independent School District declined NXP’s request for tax breaks under the Chapter 313 program, which has since been replaced by lawmakers.
Arnie Jacob, a business process consultant with the Economic Development Department, said the city stands to receive about $2.5 million in general economic impact to the community and $1.5 million in net fiscal benefit to the city.
“NXP is a strong community member,” said Sabine Romero, the department’s global Business expansion manager. “They are a very involved community member. They are well known for volunteering across the city.”
She said the company has participated in a Hispanic education awareness team, a Black achievement and leadership team and as a leader in community volunteer initiatives.
NXP arrived in Austin in 2015 when it purchased Freescale Semiconductor, which had previously spun off from Motorola. The company’s facility on William Cannon Drive also serves as its U.S. headquarters. It has two other facilities in Chandler, Arizona.
At its East Austin facility, NXP manufactures complementary metal-oxide semiconductors, or CMOS, which are used in many kinds of integrated circuits, as well as other products. In Southwest Austin, it produces CMOS, semiconductor sensors and more. The company, which joined the S&P 500 in 2021, generated $13 billion in revenue for 2022, up from $11 billion in revenue in 2021.
“I appreciate having a local manufacturing hub here and I appreciate having them want to expand here in Austin,” Council Member Paige Ellis said. “As times change, the pieces that need to be manufactured change. I always support local businesses trying to expand and hire here within the city limits.”
Editor’s note: This story has been updated with more details about Austin’s recent incentives history and the possible federal incentives for NXP Semiconductor.
© 2024 American City Business Journals. All rights reserved. Use of and/or registration on any portion of this site constitutes acceptance of our User Agreement (updated April 19, 2024) and Privacy Policy (updated December 19, 2023). The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of American City Business Journals.