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States sweeten their offers to chipmakers to outdo one other

Erika Bolstad, on

Published in News & Features

HILLSBORO, Ore. — “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 Unites 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.

Since the CHIPS Act was signed into law last year, companies have announced more than $166 billion private-sector domestic manufacturing investments, the White House said. In addition, 50 community colleges in 19 states have announced new or expanded programs to prepare workers for jobs designing and making chips in the new factories.


So far, the Commerce Department has received more than 460 statements of interest in new factories or chip-related education and training projects from 42 states, said Commerce Secretary Gina Raimondo, the former governor of Rhode Island. States have a critical role in working with private employers to access federal incentives, tax credits and other benefits of the CHIPS Act. Companies competing for the federal money must demonstrate they’ve collaborated with states to plan industrial facilities, workforce training and research centers.

Federal funding for most projects will range between 5% and 15% of total capital expenditures, the administration said. The fabrication factories where chips are made, known as “fabs,” are expensive production centers that take many years to build and can be difficult to site because of their massive footprint.

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.


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