In July 2024, Texas Governor Greg Abbott visited Taiwan to strengthen bilateral ties between the two regions, aiming to attract Taiwanese semiconductor companies to set up operations in Texas. As part of this effort, Abbott signed an economic cooperation agreement with Taiwan's Ministry of Economic Affairs (MOEA) and established the State of Texas Taiwan Office (STTO).

The STTO's mission is to boost economic collaboration and increase Taiwanese investment in Texas, particularly in the semiconductor sector.

Texas, home to major players like Samsung, GlobalWafers, Texas Instruments, and AMD, leads the US in semiconductor production, exporting US$19.3 billion in 2021. STTO Director Joe Nieh spoke with DIGITIMES Asia at the annual SEMICON Taiwan event, where Texas was part of the US Pavilion. He discussed the office's goals and plans, specifically focusing on attracting Taiwanese semiconductor and EMS companies to Texas.

The Lone Star State's financial incentives

"We see great potential for Taiwan's semiconductor supply chain companies to integrate with Texas' semiconductor ecosystem," Nieh said.

"Taiwan has trained its semiconductor industry to world-class levels, so we hope to foster more collaborations and bring Taiwan's advanced technology to the Texas market."

Nieh highlighted Texas' competitive advantages, particularly its business-friendly tax system. "Texas doesn't have a state-level corporate income tax or personal income tax. We also waive sales and use taxes for manufacturing equipment and energy used for manufacturing. Additionally, there are property tax exemptions and R&D tax incentives that make Texas attractive to high-tech industries," he explained.

To further support semiconductor companies, Nieh pointed out the Texas Semiconductor Innovation Fund (TSIF), a US$700 million fund offering cash grants to the semiconductor ecosystem, including fabs and related businesses. "This fund can be particularly helpful for companies already considering a presence in Texas," he added.

Nieh also emphasized Texas' focus on advanced packaging technologies, which is crucial for the next phase of semiconductor innovation.

"Advanced packaging is a key area of development, and Taiwan's industry is well-positioned to contribute," Nieh said, highlighting a US$1.5 billion grant for research in advanced packaging that could foster joint projects between Taiwan and Texas.

Beyond semiconductors, Nieh outlined Texas' growing interest in industries such as aerospace, defense, energy, electric vehicles, agriculture, and biomedicine. "These sectors are the focal points of our office's efforts, and we're actively looking for more collaborations with Taiwan," he said.

Navigating through Texas's decentralized economic development system

The STTO, despite being operational for only two months, has already assisted several Taiwanese companies in navigating Texas' decentralized economic development system.

"Before, companies might have spent months trying to understand local incentives and regulations, but now, with our office, they can make more informed decisions faster," Nieh said.

The STTO Director outlined how his office assists companies by first gathering background information and understanding their operational needs before introducing them to Texas' central economic development team.

This team then consolidates the company's requirements into a well-structured form, which is subsequently shared with over 400 cities across Texas. Each city, equipped with detailed data, evaluates whether it can accommodate the project based on its scale and local economic conditions.

Nieh stressed that this decentralized system provides businesses with multiple options, offering them a "bird's-eye view" of the entire state's offerings. This approach prevents companies from being confined to heavily saturated metropolitan areas like Houston or Austin, where incentives are harder to secure.

Instead, companies can explore less-crowded cities with competitive advantages, enabling them to make better-informed decisions on where to establish operations.

The whole ecosystem

In conclusion, Nieh emphasized Texas' strong position in the semiconductor industry, highlighting that the state has no shortage of talent and a well-established market to attract more players. While Arizona's partnership with Taiwan Semiconductor Manufacturing Company (TSMC) began years ago, Texas remains open to similar collaborations, with a focus on creating win-win scenarios for long-term cooperation.

Texas' strategic location adjacent to Mexico further enhances its appeal to Taiwanese companies, particularly those in the EMS sector. This proximity allows companies to establish manufacturing capabilities in Mexico while maintaining design, sales, and R&D operations in Texas, benefiting from a fully integrated ecosystem.

This cross-border collaboration model mirrors Taiwan's success in nurturing a complete semiconductor supply chain, further solidifying Texas' position as a key player in the global market.

As the STTO continues to engage with Taiwanese semiconductor firms, it aims to foster business development opportunities that extend beyond semiconductors to other sectors such as aerospace and energy, ensuring sustained growth and a strong presence in Texas.

By: DocMemory
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