States sweeten their offers to chipmakers to outdo one other

September 18, 2023

Stateline: States sweeten their offers to chipmakers to outdo one other

Stateline reports:

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 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.

But as Jacob Whiton tells Stateline, states should be cautious when it comes to throwing money at companies already able to benefit from billions of dollars in federal subsidies:

“Nonetheless, the Commerce Department has so far indicated it prefers that states entice chipmakers with workforce development, infrastructure and site preparation incentives that will have spillover benefits for the broader community, rather than direct incentives like tax abatements…

“We’ve been trying to spread the word that federal CHIPS money only requires state and local involvement in a project, not direct subsidies,” Whiton said in an email.

Read the full story at Stateline.