Despite requests from Oregon and Intel that the location be in Hillsboro, the Biden administration on Monday granted Arizona State University its third and final national semiconductor research site.
The choice is not shocking. For several weeks, Oregon officials believed that the state’s prospects were dwindling. Late this month, Governor Tina Kotek implicitly acknowledged that when she announced her intention to set aside farmland close to Hillsboro for the project.
It will still hurt that Monday decided to have the packaging and prototyping done in Arizona. The other two locations traveled to the Silicon Valley and upstate New York.
The federal government has invested hundreds of millions of dollars in the three National Semiconductor Technology Centers, with millions more expected from the private sector. The 2022 CHIPS Act, which intends to reduce the United States’ dependency on Asian technology and revitalize local semiconductor industry, gave them authorization.
“This new facility will strengthen our domestic supply chain, drive advanced manufacturing breakthroughs, and secure America’s leadership in this critical industry,” said U.S. Commerce Secretary Gina Raimondo, adding that Arizona has traditionally been a center for technical advancement.
Raimondo has hailed Oregon as a highly competitive bidder for a research facility in 2023 and cited Oregon as a model for other states seeking funds under the CHIPS Act.
A key component of Oregon’s plan to revive the state’s semiconductor industry was securing one of the three research locations. Political leaders, including U.S. Senator Ron Wyden, challenged the Biden administration on the issue on several occasions.
Additionally, under previous CEO Pat Gelsinger, Intel begged the Biden administration to locate a research facility close to the company’s cutting-edge Hillsboro facilities. It was envisaged that a new generation of semiconductor activity in Oregon would be anchored for decades to come by the new research facility.
What went wrong, then?
The Biden administration was hesitant to link any of the research sites to a single corporation, according to people close to Oregon’s bid. While there are other sizable chip businesses in the vicinity of New York, Arizona, and Silicon Valley, Intel leads the semiconductor industry in Oregon. (Intel’s headquarters are in Santa Clara, California, and it also has large plants close to Arizona State.)
Additionally, during challenging discussions for billions of dollars in direct CHIPS Act payments for the chipmaker, ties between the Biden administration and Intel chilled. Over the course of the year, Intel’s own market position declined, casting doubt on its long-term prospects and making the Biden administration hesitant to tie the future of U.S. chip manufacture to Intel’s own.
Additionally, some involved in Oregon’s application believed that the Commerce Department would be hesitant to locate all three semiconductor research centers in states that consistently support Democrats after Donald Trump won the presidency in November.
One of the main drivers of Oregon’s economy is the semiconductor sector, but since 2022, when Intel selected Ohio as the location of at least two significant new plants, state officials have feared that the sector is under danger.
In response, corporate and government officials came up with a strategy to improve the long-term prospects of Oregon’s chip industry. This plan included suggested land-use adjustments to increase the availability of industrial land and hundreds of millions of dollars in direct subsidies.
Later, a number of chip companies, including Intel, declared their intention to grow their operations in Oregon. However, no significant semiconductor company chose Oregon as the location for their new facility; Microchip Technology halted its plans to expand in Gresham, and it is now unclear how big Intel’s own Hillsboro expansion will be.
Oregon exports are still dominated by semiconductors, and despite 1,300 layoffs last fall, Intel is still the biggest employer in the state, employing almost 20,000 people in Washington County.
Sen. Wyden commended the CHIPS Act on Monday, stating that it will continue to benefit Oregon even in the absence of a federal research hub, acting as a stimulant for both public and private investment.
Research and development in our state is crucial, and Oregon continues to be the center of the U.S. semiconductor sector, according to Wyden. In the years to come, there will undoubtedly be numerous more chances to obtain more benefits from this historic legislation.
However, as domestic semiconductor manufacturing centers around new locations in Arizona and New York, the future of Oregon’s chip industry is becoming more and more unclear.
Most notably, as it attempts to reverse a sustained drop in sales of its PC and data center chips, Intel is experiencing an existential crisis. Intel is publicly considering dividing into two companies, one for chip design and the other for large manufacturing.
The economy of Oregon would be significantly impacted by any further deterioration in Intel’s fortunes or a corporate split. In any case, thousands of jobs might be lost and the tens of billions of dollars Intel spends in Oregon each year could be at risk.
–Mike Rogoway writes on the business and technology in Oregon. You can reach him at 503-294-7699 or [email protected].
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