NXP OK'd for tax rebates for $291M Austin project – Austin Business Journal – The Business Journals
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NXP Semiconductors NV has secured approval for a $1 million incentives package from the city of Austin, opening the door for potentially much more federal support as the chipmaker looks to update equipment in Austin. "This is an important step forward for both Austin and domestic manufacturing," one exec said.
NXP Semiconductors NV has secured approval for a $1 million incentives package from the city of Austin, opening the door for potentially much more federal support as the chipmaker looks to update equipment in Austin.
The deal, codenamed “Project Live Oak,” will incentivize plans by the Dutch company to invest roughly $291 million to replace production lines at its two Austin factories: at 3949 Ed Bluestein Blvd. in East Austin and at 6501 W. William Cannon Drive, in the Oak Hill neighborhood of Southwest Austin.
There had been fears the lines would become obsolete without new investment.
Council unanimously voted Sept. 21 in favor of the Chapter 380 deal with NXP USA Inc., the company’s domestic subsidiary. The incentives will take the form of rebates on city property taxes.
“This is an important step forward for both Austin and domestic manufacturing and we look forward to our continued partnership with the City,” stated Mark Kroeker, NXP’s head of U.S. regulatory and government affairs. “We’d like to thank the Austin City Council and Mayor Watson, and we are delighted with the City’s decision to approve NXP’s Chapter 380 Economic Development Policy application. We are excited to move forward with our ATMC and Oak Hill sites expansion, both important locations in the community and those that will yield the creation of skilled careers in Austin.”
The company pledged to create at least 53 jobs with the project. It already employs 2,768 people between the two sites.
“We value you in our community,” Mayor Kirk Watson said as the Council approved the request from the manufacturer with a nearly 50-year legacy in Central Texas.
The deal could unlock tens of millions of dollars in federal incentives through the CHIPS for America Act. NXP (Nasdaq: NXPI) could access $15 million to $45 million in federal funding under the act, according to Austin’s Economic Development Department, equating to about 5% to 15% of the total cost of the project.
“This capital investment will provide our region with a once in a lifetime opportunity to expand the semiconductor manufacturing industry in Austin,” said Stacy Schmitt, senior vice president of communications and external affairs at Opportunity Austin, an economic development organization.
This deal marks a significant shift in incentives policy. It is the first time Austin has approved a Chapter 380 incentives agreement since 2020. That was when Austin signed a deal with component engineering firm Astute Electronics for a relatively small $1.5 million expansion.
The last incentives deal with a major corporation was in 2017 with drugmaker Merck for a local IT hub. The company ultimately pulled out of the deal because it did not achieve job creation pledges and no rebates were ever paid.
“We have a legacy of living up to this high standard for a long time,” said Philippe Montillet, NXP’s human resources lead for the Americas, prior to Council approval. He spoke after several employees praised the company for its dedication to safety and fair benefits packages.
The deal also meets Council’s goal to create new child care opportunities for both NXP employees and the wider community. Some of the incentives are tied to providing child care services.
“This investment will strengthen our economy and ensure NXP provides investment for years to come,” said AJ Bingham, a public affairs consultant for the Austin Regional Manufacturers Association.
Representatives of Central Texas Interfaith, a nonpartisan religious and labor organization, remained hesitant of the project, calling for Council to take more time to review the details of the agreement.
“While we generally don’t like taxpayer subsidies to private corporations, we are not opposed to these programs if they are shown to us to meet high community standards and involve robust community engagement. This has not yet happened at the City of Austin with the NXP proposal, jeopardizing public trust and future deliberations on similar Chapter 380 and CHIPS Act proposals,” stated the Rev. Miles Brandon, a representative of the organization and a vicar at St. Julian of Norwich Episcopal Church in Round Rock.
The approval seems to be another boost to Central Texas’ flourishing semiconductor industry, which generated $15.3 billion for the state and employed about 13,000 people in Travis County in 2020, according to data from the Texas comptroller’s office.
NXP arrived in Austin in 2015 when it purchased Freescale Semiconductor, which had previously spun off from Motorola which has maintained a presence in Austin since 1974. 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.
The deal also marks a win for NXP after the company was unsuccessful in securing school property tax breaks in 2022.
Editor’s note: This story has been updated with additional comment from NXP.
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