Texas Instruments breaks ground in Sherman, commits to $30 billion and four chip plants
An hour north of Dallas, where the D-FW area’s urban sprawl gives way to fields, Texas Instruments is building a massive facility with major implications for the U.S. economy.
At a groundbreaking Wednesday for two of the four potential factories it has planned for the site, TI president and CEO Rich Templeton reiterated the company’s commitment to building all four plants.
TI says the first factory will begin producing tens of thousands of 300mm wafer semiconductor chips daily in 2025. The second will remain a shell until demand justifies bringing it online.
“We’ll continue to build those out based on demand,” Templeton said. “Building that second plant [now] will reduce the lead time construction-wise so that when the market gets hotter, we can ramp up that second facility.”
The cost of the entire campus is estimated at $30 billion — the single largest capital investment the state of Texas will have ever seen from a company. Two dozen football fields could fit on the land that will eventually support the high-tech manufacturing plants. The development is projected to ultimately create 3,000 jobs and could be a boon for the Texoma-area economy.
“You are going to play a role in making Texas the leading chip manufacturer in the United States of America,” Texas Gov. Greg Abbott said at the ceremony Wednesday.
U.S. Sen. John Cornyn, R-Texas, sent a recorded statement, and Sherman officials made remarks as well.
“TI has solidified Sherman’s status as the high-tech hub of North Texas,” Sherman Mayor David Plyler said.
In recent months, the federal government has said that limited supplies of semiconductor chips have bottlenecked manufacturing of highly sought-after goods, chief among them new vehicles. The U.S. Department of Commerce dubbed the issue a significant factor contributing to the record inflation frustrating Americans. A Biden administration-backed $52 billion plan to subsidize chip manufacturing in the U.S. passed the Senate in late March.
In public statements, President Joe Biden has positioned strengthening domestic computer chip production as essential to America’s independence from China.
Demand for semiconductor chips is increasing globally as products evolve their computing capabilities, requiring even more chips in each individual unit than in previous history. A new vehicle today requires 150 computer chip components or more, according to Kelly Blue Book.
Chipmakers like Dallas-based TI have been cautious about bringing too much supply online while facing exceptional pressure to ramp up production, and to do so in the U.S., where industry can gain greater control of supply chains that have historically sourced parts from foreign countries. TI considered putting the four-factory campus in Singapore before ultimately cutting a huge tax incentive deal with Sherman and choosing to locate the plants in North Texas.
“Being able to get some leverage out of the significant investments that we’ve gotten down closer to Dallas really ended up making [Sherman] the right choice,” Templeton said.
To the south in Richardson, TI anticipates bringing production online later this year at a new state-of-the-art chipmaking plant named RFAB-2 that has been under construction for the past two years. A recently purchased plant in Lehigh, Utah, will also begin contributing chips this year.
Strife in other parts of the world is still causing pain for TI, even as it races to get new chip-producing plants online. The company recently told investors it would take a 10% hit to revenue in the second quarter due to COVID-19 lockdown policies in China. TI has seen suppliers purchasing fewer chips as the country’s “Zero COVID” policy has shut down manufacturing plants.
Templeton said that the difficulties facing the company’s customers in China has continued, and that TI’s projected hit to revenue remains unchanged.
