Dallas-based Texas Instruments has chosen Richardson as the site for a $3.1 billion semiconductor facility that's expected to create more than 488 jobs.

The 870,000 square-foot plant will be built on W. Renner Road, between Custer Parkway and Alma Road. It will boost Texas Instruments' chip production for a broad range of uses, such as smartphones, connected cars and industrial machinery. The company is already the biggest maker of analog semiconductors.

Texas Instruments plans to produce its more cost-effective 300 millimeter wafers at the facility. Each wafer is cut into numerous analog chips. The 300 millmeter wafers can yield twice as many chips as the company's 200 millimeter product.

Texas Instruments' new plant in Richardson will make 300 millimeter wafers. The circular wafers, pictured above, are cut into chips that are used in electronics, cars or machinery. (Courtesy of Texas Instruments)

Gov. Greg Abbott, who announced the decision Thursday morning, said the state will assist Texas Instruments with $5.1 million in grant money from the Texas Enterprise Fund, the state's so-called deal closer fund. To receive the money, Texas Instruments must first create a minimum of 488 jobs.

It's also eligible for as much as $375 million in tax breaks from Collin County, Plano ISD and Richardson.

Doubling down on North Texas

With the new facility, Texas Instruments is doubling down on North Texas. It already has a large factory in Richardson with about 800 employees. The new plant will be built next to that one on land the company already owns. It has more than 9,000 employees in Texas.

The company estimates the new facility will grow to up to 850 people, including 200 contract employees, according to a presentation it made to local governments.

Texas Instruments said its existing Richardson facility has the fourth highest property value in Richardson and the eighth largest in Collin County, according to the presentation.

The company will immediately begin building an 800-space parking garage to support its growing number of Richardson employees, spokeswoman Nicole Bernard said. She said it hasn't set a construction date for the factory.

Texas Instruments considered two other locations for the new facility, according to the presentation. It looked at a site in Singapore and a site in Upstate New York at SUNY Polytechnic Institute in Marcy.

Kyle Flessner, senior vice president of the company's technology and manufacturing group, said in a statement that Texas Instruments chose Richardson because of its proximity to its other facility and "its access to talent, an existing supplier base and multiple airports."

Abbott's announcement called Texas "a leader in the development of innovative technologies because of companies like Texas Instruments."

"Made in Texas is a powerful label, and this expansion will create hundreds of jobs, generate billions in capital investment, and further solidify Texas' reputation both at home and abroad," he said.

Seeking tax breaks

For months, the chipmaker has been weighing where to put the new facility and asking for big tax breaks for the potential expansion.

Plano ISD agreed to reduce the company's property taxes for 10 years, saving Texas Instruments an estimated $100 million. The company will still pay $21 million in property taxes over that period. To receive the tax breaks, it agreed to create up to 625 jobs paying at least $64,000.

Richardson approved tax breaks that add up to $213 million over 10 years. The company will pay $71 million in taxes to the city over that period.

Collin County approved tax breaks that are expected to total $61.7 million over a 17-year period.

To get the city and county tax breaks, the company must create at least 200 jobs within six years after the start of construction and at least 350 jobs within 10 years. The deadline for both is Jan. 1 of that calendar year.

Critics of tax incentives describe them as the equivalent of corporate welfare and say the money often goes to companies that would build in the same place anyway. They say states and cities don't require companies to prove they're exploring another location -- fueling fear of losing out on jobs and local investment.

And they say that companies often promise to create hundreds of well-paying jobs, only to create just a few dozen or move existing employees from elsewhere.

Bill Sproull, CEO of Richardson Chamber of Commerce, said Texas must offer tax breaks to compete for major companies and offset the state's property taxes. Even with Texas Instruments' strong local presence, he said, the city had to put the best deal on the table.

"The competition was serious," he said. "Texas Instruments is a global company, and there are a lot of competitive locations around the U.S. and around the world that they could expand to, so you don't want to take anything for granted."

Both Singapore and New York also offered "significant and competitive" incentives, the company told the state. Texas Instruments operates 15 manufacturing sites in nine countries.