The city of Taylor, Texas, is where Samsung has been building a $37 billion chip manufacturing project. The city has attracted the investment by offering Samsung generous incentives, some of which may now be cut if the company doesn't hit the milestones.

There have been reports that Samsung has decided to scale back its investments in new chip facilities, both in the US and South Korea, due to a lack of demand and uncertainty in the market. Taylor, Texas, wants the plant to be operational without much delay.

A new report claims that the city has revised milestones for Samsung, requiring it to complete 6 million square feet in buildings by the end of next year. It also wants to see an additional 1 million square feet being added by 2028. This would undoubtedly add pressure to Samsung as it seeks to balance its investments with sluggish demand.

An incentive package by the city that previously offered Samsung up to $25 million in rebates has been cut to a maximum of $9 million, with the condition that Samsung meets the equipment threshold for the plant by 2026. This threshold has been explained by the city as “a guarantee Samsung will start to bring in equipment to begin manufacturing chips by the end of next year.”

Taylor, Texas, is going one step further to reclaim tax revenues previously exempted to non-core properties. 90% of tax revenue generated from Linde Gas, an important gas supplier for Samsung's plant, will now go to the city's general fund instead of being reinvested into the project.

For its part, Samsung maintains that it's “fully committed” to commencing operations at the plant by 2026. However, market watchers believe that even if production begins next year, there won't be an aggressive ramp up, because there are neither higher utilization rates at Samsung's existing factors nor any sigificant orders from US clients.