Fort Worth council approves tax break for KYEC chip-test plant

Fort Worth's city council on Oct. 27 approved a 10-year break on city property tax for King Yuan Electronics (KYEC), the Taiwanese chip-testing company, in return for at least $1.3bn* of investment and 630 jobs at a plant in the city.

Two speakers spoke against the deal at the public hearing, arguing that the plant would strain the city's water and power and that Fort Worth should not subsidize AI infrastructure. Council members Carlos Flores and Chris Nettles answered that the site would test chips, not make them. Nettles then moved to close the hearing and approve the item, and the motion carried without amendment.

The plant would be KYEC's first manufacturing site in America, according to city staff. It would test and assemble chips, with cleanrooms fitted into an existing building at 273 W. Everman Parkway. The applicant is AeternZ Semiconductor Testing Corp., KYEC's Texas subsidiary.

The vote also created Tax Abatement Reinvestment Zone No. 122 over the site's 27.08 acres, which Texas tax law requires before the city can offer the break.

Under the agreement, the company must spend at least $1bn on construction at the site by Dec. 31, 2028. It must also install at least $300m of new taxable equipment by Jan. 1, 2029, and keep at least that much there every year of the deal. Missing the equipment target is a default that lets the city end the agreement.

The 630 jobs come in two stages: 160 by the end of 2029 and 470 more by the end of 2031. Average pay must be at least $80,000, with no full-time job below $60,000. In any year the company misses its jobs commitment, it forfeits that year's abatement.

KYEC has also agreed to spend 30% of its construction budget with certified small businesses in Tarrant and four nearby counties. A miss cuts the abatement by 10%.

The city would waive up to 65% of its property tax on the new building work and equipment for 10 years. Staff project it would forgo $49.91m and collect $26.87m of new tax over the decade after completion.

Separately, Nvidia said on Oct. 21 that it is giving KYEC a $1.1bn capacity reservation advance to support new testing facilities and equipment in America, with high-volume production targeted for April 2027.

KYEC told the Taiwan stock exchange on Oct. 13 that its board had approved a prepayment agreement with NVIDIA International. The filing says KYEC and AeternZ, its wholly owned American unit and the applicant in Fort Worth, will build American capacity reserved for Nvidia. It gives no amount and names no site.

Fort Worth is not the only candidate. Brianna Brown, the city's assistant director of economic development, told the council at an Oct. 20 work session that another North Texas site is under consideration, along with a site in another state near a major customer the plant would serve. She also said KYEC is working with the state to tap the governor's Texas Semiconductor Innovation Fund, and a city slide says the proposed incentive terms had made Fort Worth a finalist.

The deal pays only for results: no building, equipment or payroll, no tax break. Fort Worth has now made its offer, but KYEC has not said where it will build, and two rival sites remain in play.

Signposts: Nvidia's April 2027 target for high-volume production at KYEC's new U.S. test facilities. The construction deadline on Dec. 31, 2028, and the equipment deadline on Jan. 1, 2029. The first 160 jobs by Dec. 31, 2029, and all 630 by Dec. 31, 2031.

*Rackline estimate: $1.3bn is the agreement's $1bn construction minimum plus its $300m equipment minimum.