Samsung Considers San Jose Expansion, Offers No Guarantees

By Sharon Simonson

Samsung Electronics Co. Ltd. and its wholly owned American subsidiary Samsung Semiconductor Inc. plan to expand a North San Jose research and development operation, but are giving little detail about expectations.

At a downtown San Jose news conference late Aug. 16, California Gov. Edmund G. Brown Jr., San Jose Mayor Chuck Reed and County Board of Supervisors President George Shirakawa along with Samsung’s Jong Joong Kim announced an agreement among the parties.

But that agreement, which was distributed at the gathering and is roughly two pages long, has no detail about the scale of Samsung’s aspirations, and no clues were given during a brief news conference.

Kim is president of Samsung Electronics’ Device Solutions Management Office. Device solutions include memory semiconductors, display panels for liquid crystal display screens and televisions.

Reporters were not permitted to ask Kim questions.

In prepared remarks delivered via a translator, President Kim said, “Approximately two years from now when this new facility is completed, we will add a new research and development function plus existing sales personnel.”

The gigantic Korean company already has a 300,000-square-foot plant at 3655 N. First St., and Samsung Electronics and Samsung Semiconductor have been in San Jose for three decades, President Kim said. When Samsumg Semiconductor came to Silicon Valley, it was in its “infancy.”

“Our presence in San Jose has played a pivotal role in Samsung Semiconductor in the last 30 years,” he said. “The local government and community have made great contributions to the growth of Samsung Electronics. We are ready to prepare for the next generation by expanding our current facilities here in San Jose.”

Not a word was spoken by those participating about the nasty patent fight now taking place in San Jose federal court between Samsung and Cupertino-based Apple Inc. In 2011, the Samsung Galaxy S II sold more than 10 million units worldwide, helping Samsung capture the No. 1 global market share for smartphones. Apple also makes smartphones.

Apple has been a huge bright spot in Silicon Valley’s current economic recovery. It employs thousands of people and occupies millions of square feet of commercial property in its hometown and neighboring Sunnyvale. It is also building a three million square-foot campus in Cupertino where it plans to house approximately 13,000 employees. Apple has no San Jose presence.

“Besides our business growth, we will strive to be a company that is loved and respected by the local community,” President Kim said. “ I would like to thank everyone participating for their support and cooperation as we strive to become a leader in this global semiconductor industry.”

The memorandum of understanding contemplates a collection of fairly standard incentives from the state and the city to companies pursuing greater employment and capital investment.

It offers cash reimbursement for employee training from the state and a discounted power rate so long as it is approved by the state regulator. The city of San Jose is offereing to cut its construction taxes from 4.5 percent of the new construction valuation to 1 percent of total value. The city is also offering to cut its traffic impact fee by more than half to $5 per square foot of new development.

The MOU also limits statements to the press or public by any of the four parties without the consent of the others. The agreement also “may be terminated at any time, by written notice to the other parties.”

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