Semiconductors are among Oregon’s economic pillars and the state’s largest export. Beth Nakamura/The Oregonian
Oregon’s semiconductor industry came into this year’s legislative session asking for a lot — and lawmakers delivered.
The Legislature set aside more than $500 million for grants, loans and tax credits in hopes of luring new chip factories and a share of the $52 billion in CHIPS Act money the federal government began allocating this spring.
Lawmakers also gave Gov. Tina Kotek unprecedented authority to designate rural property for industrial development, upending the state’s well-established land-use process to fast-track new projects.
“There’s quite a few triumphs in this session,” said Andrew Desmond of the Oregon Business Council, which convened a task force last year on reviving the state’s semiconductor industry.
The task force wrote a 26-page report laying out a plan of action, which became a roadmap for lawmakers this spring. The task force’s report also suggested chipmakers were contemplating $8 billion in new Oregon projects, contingent on state assistance and access to industrial land.
The new incentives represent one of Oregon’s most ambitious economic development projects in many years. The question now is whether the Legislature’s generosity will prompt those unnamed companies to follow through.
Oregon doesn’t appear to be in line for any “mega-fabs” like those big manufacturers plan in Arizona, Texas, Ohio and New York. Those states acted sooner than Oregon and each offered billions of dollars in incentives and hundreds of acres of shovel-ready industrial land.
Still, industry boosters said this week they are confident Oregon’s new inducements will produce quick results as chipmakers and their suppliers look to expand.
“We think that we’re in a good position to compete for investments that are going to be pulling down funds from that first tranche of federal CHIPS Act” money, Desmond said.
Semiconductors are among Oregon’s economic pillars and the state’s largest export, worth approximately $14 billion last year. But with the notable exception of Intel, no company has built a chip factory in the state this century.
In a contentious legislative session, distinguished by a six-week Republican walkout in the Senate, the semiconductor legislation won broad, bipartisan support. Here’s what lawmakers approved:
- $240 million in grants and loans for the chip industry. The Legislature approved $190 million in April, then added $50 million in a final budget bill because of strong interest from companies pursuing new projects.
- $255 million in tax credits for semiconductor research, restoring and expanding incentives that expired in 2017. The legislation, which won final Senate approval on a 22-3 vote Saturday, allows companies to use the credits to offset up to $4 million in Oregon tax liability. Smaller companies that don’t owe Oregon taxes can take a portion of the tax credit as an outright grant.
- Nearly $73 million in state funds for a new supercomputer lab at Oregon State University, adding to $50 million Nvidia CEO Jensen Huang, an Oregon State alumnus, pledged last year.
- $10 million for university semiconductor research, and another $10 million for industrial site readiness. The task force had sought many times those sums.
- Authority for Kotek to designate up to eight rural sites for the semiconductor industry. The land-use provision was initially contentious, but land-use advocates relented after lawmakers limited the number of projects and gave the governor only until the end of 2024 to act.
Ampere Computing, a fast-growing chip engineering firm with offices in Portland’s Pearl District, lobbied hard for the research tax credits approved in the session’s final hours. The company said they will help small and midsized Oregon companies become major players.
“Ampere was founded in Oregon in part due to the strength of a strong talent pool and an existing ecosystem around research and development,” the company said in a statement. “The Legislature’s semiconductor package will enhance and accelerate this ecosystem and provide positive economic benefits for the long term. "
Already, though, Oregon has suffered one major setback in pursuit of new semiconductor investment. Microchip Technology was contemplating a new $5 billion factory in either New York or Oregon, but the company shelved the project in December, opting to outsource new production to a contract manufacturer instead.
Two other chipmakers are publicly contemplating new Oregon expansion.
HP Inc. says it will return some manufacturing jobs to Corvallis from factories overseas if wins a share of the federal CHIPS Act money. And Intel wants federal support for a major new lithography lab in Oregon, which is already home to Intel’s most advanced research.
Oregon economic development officials that they’re negotiating with other companies, too, that don’t want their business plans disclosed before they’re ready to act. But officials are hopeful of winning new projects later this year, perhaps as soon as this summer.
John Calhoun of Tax Fairness Oregon testified against the research tax credits during this year’s session, voicing skepticism they would be determinative in landing new semiconductor investment. But Tax Fairness Oregon didn’t oppose other grants and loans, and Calhoun said this week that guardrails on the tax credits will keep them from getting out of hand.
“It gives the economic development people something to talk about. They’ll be able to say we’ve got something, and companies that were thinking about expanding, like an HP or an Intel, they will expand. Because the state said yes, we love you,” Calhoun said. “But it doesn’t compete with the states like Ohio and New York that are giving two or three billion dollars.”
A broad appropriations bill that passed the Senate on Sunday and was awaiting final passage in the House includes a $2 million grant for semiconductor workforce development, focused on summer classes and college preparations for science and math students at historically Black colleges and universities. The Biden administration has made developing a diverse workforce a key priority in allocating CHIPS Act funding.
Oregon lawmakers didn’t take up separate requests for hundreds of millions of dollars for industrial site readiness and workforce development. Desmond, from the Oregon Business Council, said he hopes lawmakers will take up those issues in the future – warning that a shortage of land or skilled workers could impede long-run economic growth.
“We should celebrate the steps that we took in this session, but we can’t rest on our laurels,” Desmond said. “There’s more work to be done. Otherwise, there’s going to be jobs left on the table for Oregonians.”
Oregon offers chipmakers more than $500 million, hoping for billions in return
Semiconductors are among Oregon’s economic pillars and the state’s largest export.
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