No local improvements or community benefits were completed before the deal was canceled due to issues with federal funding. Although that's not moving ahead, NXP has recently petitioned for millions of state dollars for other Texas projects.
What happened
Last fall, NXP terminated the economic deal with Austin that would've seen more than $290 million in upgrades and dozens of jobs added at its local facilities. The modernization and expansion was expected to add to the company's hundreds of millions of dollars of estimated annual economic impact.
NXP backed out due to complications with its application for federal CHIPS and Science Act funding. An NXP spokesperson confirmed the company had hoped to secure CHIPS program funding under a wider strategy to build its global footprint, a process that's now over.
"Incentives can be helpful for enabling competitive manufacturing globally, however, after carefully evaluating the funding opportunity as well as timing and regulatory considerations, we have made the business decision to withdraw our U.S. CHIPS Act applications for federal funding of our expansions," the spokesperson said in a statement.
Despite ending its pursuit of federal funding, NXP could still end up building its Central Texas presence.
The company has sought tens of millions of dollars from the Texas Semiconductor Innovation Fund, or TSIF, for local projects, according to city records. And city and area economic officials have formally advocated for NXP's applications for those state-level opportunities.
Austin backs the company's efforts, Economic Development Department spokesperson Carlos Soto said, while the regional economic partnership Opportunity Austin is taking the lead on local endorsements with city support. Opportunity Austin declined to comment on NXP's TSIF applications or its support for those proposals.
NXP officials previously said the company's Austin facilities needed modernization in order to continue running, and that the campuses could eventually shut down and see operations moved internationally without the improvements. The company didn't confirm the current outlook for staffing and operations at the local sites.
"NXP remains focused on investing in its U.S. operations," the spokesperson said.
How we got here
Austin leaders voted in favor of the NXP incentive agreement in September 2023 to cement the future of the company's longtime Central Texas operations. The deal officially went into effect in February 2024.
Under Chapter 380 of Texas government code, cities can make agreements to spur local economic activity and job growth by trading incentives like tax breaks for community benefits like job creation. Austin also has Chapter 380 agreements in place with companies like Samsung and Apple.
The widely used program has been controversial at times and remains under legislative scrutiny; a bill filed this year could adjust the program and remove the option for tax breaks in future deals.
The city's agreement with NXP advanced in 2023 after Austin ISD leaders rejected a different economic proposal a year earlier.
Under its approved deal with Austin, NXP was expected to invest $148.6 million at its Oak Hill facility and $142.2 million at its Austin Technology and Manufacturing Center on the east side, and add more than 50 jobs between both sites.
Council member Natasha Harper-Madison's office, representing District 1 including the eastern manufacturing center, is continuing to monitor proposed NXP projects after last year's update.
"Economic opportunity and workforce development are both top priorities for council member Harper-Madison, and we look forward to seeing how NXP and other employers align their growth with Austin’s economic vision of opportunity, equity, sustainability and prosperity across all corners of this city," the District 1 office said in a statement.
Zooming in
Initial city projections showed Austin could've collected more than $1.5 million through the five-year agreement with NXP—nearly $3 million in total expected fiscal benefits, minus the cost of related city services and about $1 million in tax reimbursements to the company. Council members also pressed NXP officials to consider child care in their plans, and the company ended up committing to fund services for both its employees and Austin residents.
Since the agreement was terminated before any proposed activity took place, Soto said city finances weren't impacted and no local benefits were ever realized. NXP's is one of five Chapter 380 agreements in Austin to have ever been terminated, according to the city.
Also of note
Central Texas remains a chipmaking hub with ongoing investments as state leaders also move to bolster the industry. One major project that's drawn other business in the sector to the area—Samsung's 4 million-square-foot Taylor complex—continues to grow and earn federal funds.
In Austin, Gov. Greg Abbott announced in February that downtown fixture Silicon Labs was awarded $23.25 million in TSIF funding for research and development. Tokyo Electron is also staying near downtown after moving from its former Southeast Austin campus following a city land deal, and chipmaker SkyWater Technology is acquiring Infineon Technologies' nearby fabrication plant.
