The Places Seeing Growth in the Semiconductor Sector So Far
President Biden, with U.S. Senate Majority Leader Chuck Schumer, and New York Governor Kathy Hochul, looks at a 3D rendering of a future Micron factory presented by CEO of Micron Technology, Sanjay Mehrotra, during a tour of the Micron Pavilion at the SRC Arena and Events Center of Onondaga Community College in Syracuse, New York on Oct. 27, 2022. MANDEL NGAN / AFP) (Photo by MANDEL NGAN/AFP via Getty Images
With a major federal push underway to boost production of microchips in the U.S., a trade group for the industry highlights over 40 major projects nationwide.
Microchip manufacturers and companies that provide materials and equipment to them have made plans for 42 projects across 16 states that will involve either building new facilities or expanding existing ones, according to an industry group.
The Semiconductor Industry Association says private sector investment tied to the projects will add up to around $200 billion over the next decade. The group's analysis comes as the U.S. is redoubling efforts to increase domestic microchip production, with billions of dollars in new federal support flowing to the industry. Semiconductors are crucial components in cell phones, computers, cars, airplanes and a wide range of other goods and equipment.
Between 1990 and 2020, the nation's share of global microchip fabrication capacity slid from about 40% to 12%, according to the Congressional Research Service. South Korea and Taiwan are the leaders in this area with around 28% and 22% of fabrication capacity, respectively, as of 2019. Production by Taiwanese firms also accounts for about 92% of leading-edge semiconductor production, according to a 2021 White House report. China, meanwhile, is moving aggressively to grow its semiconductor sector.
Spurred on by Chinese competition and disruptions in offshore supply chain links during the pandemic, congressional lawmakers last year approved the roughly $280 billion CHIPS and Science Act, which includes around $52 billion for semiconductor research and development, manufacturing and workforce initiatives.
For state and local governments, the law provides attractive opportunities for economic development. As a 2020 Congressional Research Service report noted, U.S. workers employed in semiconductor manufacturing earned an average wage of $166,400 in 2019. There's other potential as well, like construction jobs to build new factory sites and tax revenues once they're up and running.
The list of projects from the Semiconductor Industry Association gives some indication of where new activity in the chip sector is happening so far. Backers of the new facilities and expansions announced them between May 2020, around the time the chips legislation was first floated, and December last year. There are 22 manufacturing projects, with the largest in the $20 billion to $40 billion range, as well as 20 investments by suppliers of things like chemicals and equipment.
While the new and expanded semiconductor facilities are likely welcome in many places, it's also worth keeping in mind the tax breaks and other sweeteners that state and local governments are offering to attract companies. Good Jobs First, a watchdog group that tracks public subsidies for corporations, noted that microchip fabrication facilities were one of the most common types of projects among so-called "megadeals" it tracked in 2022, where an individual private sector project received at least $50 million of public support.
For example, Micron Technology unveiled plans in October to build new semiconductor fabrication facilities north of Syracuse, New York, with about $20 billion of investment over the next decade. As part of that deal, the company is able to tap about $6 billion in state and local tax incentives and infrastructure upgrades, the Good Jobs First report points out. Similarly, an Intel project in Ohio with around $20 billion in planned investment is in line to receive $2.1 billion in subsidies.
Debate over whether these subsidies are a worthwhile use of taxpayer dollars is sure to continue as the projects now in the pipeline take shape and as new ones emerge.
NEXT STORY: How State and Local Leaders Can Address America’s Wealth Gap