States sweeten their offers to chipmakers in competition for jobs

“Oregon’s been at this for decades,” the governor’s office assures potential investors in its so-called Silicon Forest. The Lone Star State’s governor calls it a “race that Texas must win for our state, our workforce, our national security, and our future.” And New York’s governor boasts on the state’s YouTube channel that it is the one to “lead America’s microchip resurgence.”

Since Congress passed the $52.7 billion CHIPS Act in 2022 to encourage domestic semiconductor manufacturing design and research, states have been competing to lure chipmakers. Semiconductors, known as chips, power nearly every aspect of life, and states want the investment and high-paying engineering and fabrication jobs that come with the industry. 

They’re sweetening the pot with their own tax credits and other enticements to encourage chip manufacturers to expand existing factories or build new manufacturing capacity. States also are helping chipmakers find and prepare factory sites, as well as developing new programs to educate and train necessary workers.

It’s all a part of President Joe Biden’s intention to return chip manufacturing to the United States to boost the long-term future of the industry as well as to make the country less reliant on volatile supply chains. Global chip shortages during the pandemic slowed the delivery of cars, video game consoles and even items like refrigerators.

Chips are the brains of most devices big and small, including laptops, automobiles and jet engines. They all rely on the tiny electronic devices to function, and they’re critical for future developments in artificial intelligence, biotechnology and clean energy. Yet none of the most advanced chips used in personal computers, smartphones and supercomputers are made at commercial scale in the U.S., according to the White House.

Much of the technology for the tiny electronic devices was invented here, but in recent decades, chipmaking moved overseas. Most semiconductors are currently made in Taiwan, which positions the industry amid the complex geopolitical rivalries between the U.S. and China.

Making their pitch

States have been creative — and aggressive — in their collaborations with the industry, Ayodele Okeowo, a Commerce Department official leading state outreach for the CHIPS program, said during a seminar with the National Conference of State Legislatures this summer.

“This is a unique program and a new initiative,” Okeowo said. “We’ve never tried to catalyze our domestic semiconductor industry before. But that does not mean that states are waiting to see how this goes.”

States including New York and Ohio have offered large packages to attract manufacturers. In New York, Gov. Kathy Hochul, a Democrat, announced last year that Boise, Idaho-based Micron Technology would invest $100 billion over the next two decades to build what’s known as a “megafab.” State officials project it will lead to 50,000 jobs statewide, 9,000 of them directly from Micron with an average annual salary of over $100,000. The state in turn will provide $5.5 billion in tax credits over two phases over 20 years.

New York state will also invest $200 million in road and other infrastructure improvements surrounding the campus, and $100 million in other community benefits funding. The megafab will be approximately 2.4 million square feet, or the size of more than 40 football fields, the state said.

The competition among states is fierce. Hochul boasted that 50,000 chipmaking jobs were headed to Texas until New York convinced Micron, one of the world’s largest chipmakers, it could provide “the highly educated workforce that they need for them to succeed.”

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