Austin Semiconductor Industry Could See CHIPS Act Funding, Experts Say
Central Texas on the Verge of Semiconductor Boost
It remains to be seen whether Austin-area projects will benefit from legislation designed to boost the semiconductor industry, as the Commerce Department starts announcing as soon as this month which companies will be awarded funding. Central Texas is among a handful of regions expected to see a boost from the CHIPS and Science Act, which was passed in 2022. The legislation made $52 billion available for companies that manufacture computer chips, billions more in tax credits to incentivize chip manufacturing, and tens of billions of dollars to fund scientific research and development of other U.S. technologies.
No projects in Texas have been included in the first handful of announcements made by the Commerce Department, but local industry leaders remain optimistic about the Austin area’s ability to compete with the hundreds of projects waiting to see if they will receive the remaining funding. Ed Latson, CEO of Opportunity Austin, said he expects the funding to make a major impact in Central Texas, which is already home to facilities for companies including Samsung Semiconductor, NXP, Tokyo Electron, and Infineon. “I expect to see grants being issued to local companies soon,” Latson said. “We have one of the most dynamic semiconductor ecosystems in the United States, and this will only make us more competitive as a region and as a country.”
Optimism for Austin’s Semiconductor Industry
Kevin Fincher, CEO of the Austin Regional Manufacturers Association, agreed that the region remains in a strong position. “I believe that Central Texas will lead in the semi industry going forward, and we’re well positioned for that,” Fincher said. The Austin area’s ecosystem of companies in the semiconductor industry has fabrication facilities that make chips, toolmakers, and a supply base that works with the toolmakers and fabrication facilities. Fincher predicted that Central Texas projects could hear about funding awards as early as this month. “We expect in the coming month, March, that there is going to be a slew of announcements that will start to come out,” Fincher said.
Even before the passage of the CHIPS Act, the Central Texas region was poised to see big expansions to its manufacturing capacity. Samsung, which already had two fabs in Austin, announced last year that it planned to build a $17 billion chip factory in Taylor. Filings also show the company could put as many as 11 additional fabrication facilities in Central Texas in the coming decades, though the company has said it does not have concrete plans. Semiconductor giant NXP also has been considering an expansion in Austin. Last year, the City Council approved an incentive deal worth just over a million dollars. Last month, the company said it continues to engage with the Commerce Department on its proposals.
Commendable Investment and Expected Growth
“While we cannot indicate a timeline with certainty, we understand the process could take a number of months and we are optimistic that the proposed expansion would meet the program goals,” a company spokesperson said. “We are pleased there continues to be an ongoing dialogue and movement on the need to support the industry.” Fincher predicted investment will continue, both in company growth and in the workforce needed to support these companies.
Semiconductor Industry Response to CHIPS Act Funding
During a Feb. 4 event hosted by the Cybersecurity and Infrastructure Security Agency, Commerce Secretary Gina Raimondo said there are “tough conversations” as the department works on distributing the funding. Raimondo also said the department would prioritize projects that will be operational by 2030. The changes came as leading-edge companies requested about $70 billion in funding, or about double the amount in federal subsidies available.
Commerce has announced about $2.5 billion in funding to three companies: BAE, Microchip, and Global Foundries. Raimondo said that while there’s risk in picking winners and losers, there is “way more risk in doing nothing” and said another CHIPS Act will probably be needed to continue to boost the industry.
Future Prospects of Central Texas Semiconductor Industry
“We’re going to have to say no to excellent companies with excellent proposals,” she said. Raimondo acknowledged during the CISA event that companies were probably frustrated to receive less money than they were hoping to get. While acknowledging that there have been project delays nationally that might be related to the rollout of funding, Matt Bryson, an industry analyst with Wedbush Securities, has already been working as intended. “We’ve seen arguably a historic amount of chip infrastructure investment planned for the U.S., including from a number of companies that either had never invested in the U.S. or who had chosen not to invest in U.S. fabs in recent years,” he said.
He added that the focus on projects that will be completed by 2030 makes sense. “If the goal is to accelerate investment, I think it necessarily makes sense to prioritize the bird in hand, so to speak, vs. investment plans that are further out and that might not come to fruition,” Bryson said. Fincher, of ARMA, said Central Texas is likely to benefit from the 2030 timeline. “We are very much in the right spot,” he said. “Most of the companies that we’re looking at will be set up and operational and running by then. So I think that’s an advantage right now to our manufacturing sector here in Central Texas.”
