During remarks for Intel’s groundbreaking at its $20 billion megafab site in Ohio, President Biden called attention to expansion of 668,000 domestic manufacturing jobs under his tenure, especially around chip production with the CHIPS Act he signed into law in August.
There’s no question there is more attention to domestic self-sufficiency for an array of products since 2020 for everything from toilet paper to baby formula-- thanks to Covid scares. And, for the semiconductor sector, there is something like an explosion of interest in fab production investments, if not actual construction of facilities.
In addition to Intel’s impact in central Ohio, Biden on Friday mentioned Micron’s plan for $40 billion over 10 years for manufacture of memory chips and a $4 billion GlobalFoundries partnership with Qualcomm.
A new one he mentioned Friday is for $5 billion by Wolfspeed to make wafers used for chips for EVs in North Carolina.
What becomes clear in reviewing all these plans for new fabs is that companies like Intel, Micron and Wolfspeed need more than federal dollars and incentives from state and local governments. They all speak of “collaboration” and “strategic investments” as well as a strong talent pool, backing from higher ed and even the availability of plenty of land with access to electricity and water.
In other words, it is not just government funding, although some might argue that without the CHIPS Act and its funds, concerns about how far the US has dropped in global chip production in recent decades to less than 12% would never have been raised, almost weekly, by trade groups like SEMI and the Semiconductor Industry Association.
Biden claimed the CHIPS Act he signed in August provided impetus for the expansion of chip fabs, although it is not always clear which companies will apply for dollars under the $52 billion CHIPS Act or hope to rely on investment tax credits.
Intel has expressed interest in recouping $6 billion for two fabs in Ohio, but it isn’t clear how others will proceed. Wolfspeed said it “hopes to apply for and obtain federal funding” from the CHIPS Act, according to a press release.
“Because I signed into law the CHIPS and Science Act, we’re accelerating the progress” towards Made in America and more domestic manufacturing jobs, Biden said in his remarks. “This new law makes historic investments for companies to build advanced manufacturing facilities here in America. Since I signed the CHIPS and Science Act, it’s already started happening.”
There is no question the CHIPS Act has ignited interest by landowners and state and local government officials in attracting large chip fabs. The attention generated by the Act has included strong lobbying by many states, with some coming from federal elected officials. Sen. Mark Warner in Virginia, a CHIPS Act co-sponsor, was an example.
While Warner has wanted Micron to expand in Virginia, the company recently announced a planned $15 billion facility in Boise, and then reports surfaced of Micron’s applications for permits for fabs worth billions of dollars near Austin, Texas.
Chipmakers are scrambling to get the best deals of incentives from governments, but the package of perks they seek is far more nuanced than a cash grab, even in the form of soft commodities like Ohio’s strong Midwestern work ethic mentioned by several speakers at Friday’s groundbreaking.
Carolina Core values
Wolfspeed said it will produce a facility to make 200mm silicon carbide wafers, larger by 1.7 times than 150mm wafers, translating into more chips per wafer and lower costs. Its official release doesn’t include the $5 billion amount mentioned by Biden, but does say Wolfspeed will build a “multibillion dollar” facility in Chatham County, North Carolina. Phase one construction will be done in 2024 and cost about $1.3 billion.Until the end of the decade, the company expects to create 1,800 jobs.
In addition to hopes it has to receive funds under the CHIPS Act, Wolfspeed mentioned receiving a $1 billion incentive package from state, county and local governments.
Not only about money
Part of what matters in attracting these large fabs and related projects is not only money, but a strong work force and a committed academic community willing to promote curricula that train workers, both skilled technicians and engineers. Having available buildable land, sometimes hundreds of acres, matters as well, as economic development officials in Virginia have repeatedly told elected officials there.
Mike Fox, president of the Piedmont Triad Partnership in North Carolina described the various features that come into play. Wolfspeed’s decision and other large capital investments in central North Carolina known as the Carolina Core are “a testament to the unprecedented regional collaboration, strategic investments, highly skilled workforce and readily available sites in the Carolina Core that empower companies to push the boundary and innovate for tomorrow.”