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Efforts underway in the states to capitalize on CHIPS funding

September 08, 2022
By: Jonathan Dillon

With President Biden’s signing the CHIPS and Science Act on Aug. 9, states and universities are already making plans to build on the funding opportunities present in the legislation. For example, a group of Midwest colleges and universities has formed a new coalition to support the advanced semiconductor and microelectronics industry as Intel begins construction on a microchip plant in Ohio, and multiple states are positioning themselves to compete for semiconductor manufacturing incentives — as encouraged by Commerce Secretary Gina Raimondo. This article summarizes these early state actions (for recent federal activity, see SSTI’s coverage).

In New York, Gov. Kathy Hochul signed the Green CHIPS legislation aimed at creating jobs, kick-starting economic growth and maintaining important environmental protections while making New York a hub for semiconductor manufacturing. Green CHIPS is intended to help New York attract chip manufacturers to the state, generating at least $3 billion investment, creating 500 new jobs per project, and lowering greenhouse gas emissions related to chip production. As part of the legislation, New York will award refundable credits to projects that meet certain eligibility criteria under Empire State Development’s Excelsior Jobs Program.

New York’s effort to draw semiconductor manufacturers to the state have been successful. On Oct. 4, the state announced Micron’s plans to spend $100 billion over two decades to build a new computer chip factory in upstate New York. This announcement follows Micron’s pledge to spend $40 billion through 2030 on U.S.-based chip manufacturing, creating over 40,000 domestic jobs. New York’s Green CHIPS legislation will provide Micron with a performance-based incentive package valued at $5.5 billion. The incentive package is tied to Micron’s job creation and $100 billion investment and is contingent on Micron’s ability to meet sustainability standards. According to a press release from the governor’s office, an economic impact study by Regional Economic Models estimates a $16.7 billion inflation-adjusted economic output for the state due to Micron’s investment.*

In California, Applied Materials Inc, a Santa Clara company that manufactures equipment used to make chips, received a $30-million grant in exchange for the company’s promise to invest $2 billion to develop improved manufacturing equipment and create at least 683 full-time jobs. The Governor’s Office of Business and Economic Development said the grant would be “vital to Applied Materials’ ability to secure federal CHIPS Act funding,” referring to the bill under a prior name.

Texas officials have said that the CHIPS Act would likely encourage semiconductor businesses to invest more in their state. Samsung has reportedly filed paperwork to build 11 different semiconductor factories between Austin and Taylor, which could bring around 10,000 new jobs into the state. The Texas Tribune reported, “Last year, Abbott formed a task force with the goal of luring the U.S. Department of Commerce into building its National Semiconductor Technology Center in the state. Samsung’s $17 billion expansion was also a recipient of an economic incentive program, known as Chapter 313, that offers property tax breaks to developments that bring new jobs.”

The CHIPS act also has become an integral part of the Intel’s investment in central Ohio. In January 2022, Intel announced it would invest at least $20 billion to build two semiconductor factories in the state, which would create 7,000 construction jobs and an additional 3,000 permanent jobs. Ohio offered Intel a subsidy package worth over $2 billion. The state is offering $1.2 billion in cash incentives, including a direct cash grant to the company valued at $600 million to help offset Intel’s construction costs. Ohio has also agreed to cover $691 million in the company’s infrastructure costs for the project and provide Intel with $650 million in job-creation tax credits over a 30-year period. In addition, Intel is being offered local property tax abatements and $150 million in workforce grants from Jobs Ohio, the state’s development agency.

Beyond the practical concern of having enough space to build, Intel chose to base this new project right outside of Columbus mainly because of the freedom offered in some of Ohio’s state and local regulations, and the talent that the city of Columbus could offer. Currently, 90 percent of chip manufacturing capacity is overseas, but Senator Sherrod Brown’s office says that with these investments in domestic manufacturing, chips will become a major American export out of Ohio.

In response to the recent decision by Intel Corporation to build the new, leading-edge chip factories in Ohio, and to address the broader, national efforts to promote U.S. leadership in semiconductors and microelectronics, 12 Midwest colleges and universities announced that they have banded together to form the Midwest Regional Network to Address National Needs in Semiconductor and Microelectronics. The network has started out with goals to develop a secure information-sharing platform to facilitate joint programming, research, and/or outreach initiatives across the network and are hoping to encourage regional collaborations and promote workshops to pursue funding.  Ohio State University has announced that it will lead a steering committee to coordinate the next steps. The network is expected to grow beyond the initial 12.

This announcement follows an announcement from a year ago that Arizona was home to an effort to launch a national semiconductor economic roadmap (see our prior coverage here). Recently, Arizona State University (ASU) has hosted panels and tours for local officials and those in Congress, reinforcing the urgency of putting the funding from the CHIPS Act towards growing Arizona’s manufacturing workforce. ASU’s MacroTechnology Works facility, which facilitates the university’s semiconductor research and workforce development efforts, is being touted as a model for policymakers as they consider how to advance the industry in the U.S.

*This article was updated Oct. 11 to include information on New York's agreement with Micron.

states, university-partnerships, funding, semiconductors, legislation, chips, economic development