AUSTIN – Texas business and manufacturing leaders are praising the new semiconductor law, which they say will strengthen the state’s role as a leader in chip production.
Last week, Congress passed the CHIPS and Science Act, a $52.7 billion law that encourages domestic production of semiconductor chips used in many modern technologies, including cars, phones, computers and medical devices.
Robert Allen, President and CEO of the Texas Economic Development Corporation. said Texas will “benefit tremendously” from the CHIPS law.
“Several articles have been written over the last few days about Texas likely being the primary beneficiary of the CHIPS Act, and I wholeheartedly agree,” Allen said. “This is certainly good news and certainly welcome news for the State of Texas in our ability to continue to shine as a leading state in the semiconductor industry.”
Gov. Greg Abbott and Texas Executive Director for Economic Development and Tourism Adriana Cruz made recruiting semiconductor projects a top priority, touting the state as the best state to do business with its tax incentives and growing workforce.
Because of that, they say, Texas has laid the groundwork for a likely windfall of big semiconductor investments, followed by related supply chain companies that find it beneficial to be located close to their customers. The CHIPS law also included incentives to strengthen domestic supply chains.
Then comes the multiplier effect, which refers to an investment’s impact on jobs and an economy. According to the Economic Policy Institute, for every 100 direct jobs created in semiconductor manufacturing, 192.2 indirect jobs are created.
So every big announcement in Texas brings not only thousands of high-paying tech jobs to work at the new plants, but also tens of thousands of side jobs, including those in hospitality, retail, and hotels. It also means more homes and roads to be built, furniture and cars to be bought, and schools to be filled with children, creating more jobs, said Tony Bennett, president of the Texas Association of Manufacturing.
“Just bringing the semiconductor manufacturing sector into your community has an extremely high return on investment for the region,” said Bennett. “It’s not just the semiconductor fab that you will win in terms of job creation and economic activity, it’s literally the hundreds of vendors and suppliers that will keep this fab running for decades.”
Coming soon to Sherman
Texas is currently the leading state in semiconductor chip manufacturing with more than $50 billion in investments in the pipeline, said Glenn Hamer, president and CEO of the Texas Association of Business.
These include recent successes in securing Samsung’s $17 billion investment – and potentially a $191 billion investment – in several semiconductor manufacturing facilities outside of Austin; a potential $30 billion expansion by Texas Instruments into Sherman; and a $5 billion chip fabrication bid by GlobalWafers, also in Sherman.
Hamer added that Texas could see semiconductor manufacturing worth closer to a quarter of a trillion dollars over the next decade.
“As we speak, Texas has the healthiest economy in America, (the bill), only that really ensures our long-term prosperity,” he said.
Bennett added that while these plants may take years to come back up, in the meantime they are creating thousands of jobs in construction, piping, electrical, steel, concrete and more.
“The impact will be immediate,” Bennett said. “It takes several thousand people to build these plants, so immediately in all your regional trades … Thousands of jobs will be created for the next two to three years.
What that means for Texas
Overall, Texas manufacturing and economic experts say the CHIPS Act can only benefit the state and its residents. It will create more high-paying jobs that will allow communities to thrive as they can bring more taxes and resources to their residents.
According to the Texas Workforce Commission, the semiconductor industry added 1,900 jobs from June 2021 to June 2022 at a CAGR of 4.5%. In the Dallas-Plano-Irving metropolitan area, the semiconductor manufacturing sector recorded an annual growth rate of 3.4% in June 2022, it said.
Bennett added that jobs themselves offer growth and educational opportunities that are beneficial for young people who don’t plan to go to college immediately after high school, as well as veterans looking for new career opportunities.
But the population of Texas is already exploding. According to the 2020 census, Texas added four million residents over the past decade, and an estimated 1,000 people move to Texas every day. That means more resources like water, transportation, and reliable energy are needed.
Hamer said he’s not worried about that, adding that Texas is making the investments needed to keep up with the growth.
“We will rise to the challenge,” said Hamer. “Texas is investing in its infrastructure, we will continue to invest in our infrastructure, but it’s a million times more positive to be growing and to be a desirable location for business than to be in the situation of states like California, Illinois and New York that are seeing how companies and people go. “
He added, “Growth is good.”