Samsung plans massive factory in Texas that may boost tech industry in nation’s capital

Samsung is investing $17 billion to create 2,000 jobs at a major Texas chip factory that will be the next stop on the company’s global expansion plan.

The company announced Thursday it will build its seventh semiconductor factory in Dallas County, which is nearly 75 miles from the nearest previous plant. Samsung aims to open the plant in the first half of 2020.

The sprawling, $150 billion semiconductor empire owned by South Korea’s Samsung Electronics faces intense pressure to invest in the sector to support the growth of a new smartphone technology called 5G, which will require far more powerful chips.

Samsung dominates the smartphone market, with its Galaxy S and Note lines, but is now scrambling to catch up with rivals Apple and Huawei in data centers, networking equipment and automotive technology.

Apple — which takes in almost a third of Samsung’s total revenue, and orders more than 90 percent of the chips it uses — plans to use its latest Mac computers in Houston to bolster efforts to design artificial intelligence for everything from cars to smartphones.

Analysts expect Apple to announce a technology center in Austin, where it plans to open a technical center by the end of the year.

Other chip producers also see the future of technology in 5G, with Nvidia recently pledging to invest nearly $3 billion in its next-generation technology.

Austin’s return to Silicon Valley

Austin’s Silicon Valley ambitions started in earnest in 2010, when Apple bought 1 million square feet of real estate in the city and employed thousands of software engineers, many of whom were lured by former Google CEO Eric Schmidt to get a first-hand look at the ever-growing world of the Internet’s connectivity.

Despite Austin’s small size — it has more than 1 million residents — the city is known as one of the best locations in the U.S. for technology research. Scores of big companies set up research and development operations to build computers, software and hardware. Texas is home to more than half of all U.S. tech startups, according to research firm CB Insights.

Apple’s efforts are highly visible in its 1 million-square-foot tech campus, where it employs more than 17,000 workers. The company plans to grow its workforce in Austin to 45,000 people by 2025, which would make it the most populous operation outside its Cupertino, California, headquarters.

The expansion, which will include the new Samsung plant, is welcome news for Austin Mayor Steve Adler. Many fear the Texas city’s growth — it’s now the state’s most populous city and fourth-largest city in the country — will slow down.

“This is really critical news for our region,” Adler said. “What we’ve been arguing is that we are a global hub for Silicon Prairie innovation and technology. A lot of that is software.”

Jobs would likely be lower-paying than those that Apple hires, especially at the technical level. For example, Samsung’s Dallas area plant will employ 6,000 permanent workers, not counting the thousands who will be hired on an “as needed” basis.

A last stand for auto tech?

Apple and other tech companies are betting on automakers to create the next generation of personal transportation technology. As with the smartphone, the car has long had the potential to be a hub of digital connections to the Internet and to mobile applications that influence everything from drivers’ habits to their personal lives.

Ford, GM and Lyft all plan to deploy self-driving vehicles sometime in the next few years. Lyft says it plans to have tens of thousands of autonomous vehicles in cities by 2021, and Uber is reportedly working on self-driving cars too.

These efforts are the strongest indication that automakers are looking to the Internet, if not as the company it once was, then as a platform for helping them move beyond the car. Although Apple hasn’t made any real progress, Lyft has become a significant competitor to the ride-hailing company’s business, accounting for nearly 1 million rides per month.

The Dallas plant is expected to produce memory chips for servers, which could help Samsung try to compete with some of its rivals in that field. Micron Technology and Japan’s Toshiba have established major U.S. memory chip plants in a couple of other states, including Alabama and Arizona.

Jay Aptaker, a Texas official, said Samsung’s future production plans will be better known when the company is ready to begin laying off workers.

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