TECHNOLOGYWith $1.4 Billion investment, Texas Hopes to Sprint to the Front of the Microchip Manufacturing

By Francisco Uranga

Published 14 June 2023

Microchips are increasingly present in every day life, from phones and laptops to cars and washing machines. Gov. Greg Abbott approved last week a stimulus package in an effort to shore up the supply chain after the pandemic’s disruptions.

Leaders in the semiconductor industry and their Texas allies were alarmed by supply chain disruptions to the sector during the pandemic. Now the state is seeking to turn the lessons learned in the past three years into an opportunity.

Texas is pumping $1.4 billion into microchip research and manufacturing initiatives in an effort to attract new investments, secure lucrative federal grants and create thousands of high-paying jobs over the next decade.

On Thursday, Gov. Greg Abbott approved the Texas CHIPS Act, which will create the Texas Semiconductor Innovation Fund, a pot of money that will subsidize companies that manufacture chips in Texas and provide matching funds to universities and other state entities that invest in chip design or manufacturing projects.

Lawmakers this year appropriated $698.3 million for the new fund and an additional $666.4 million for the creation of advanced research and development centers at the University of Texas at Austin and Texas A&M University.

The investment illustrates the state’s commitment to the national race to capture billions of dollars in federal funds for the industry.

Last August, President Joe Biden signed the federal CHIPS and Science Act, allocating $52 billion to spur semiconductor manufacturing in the country. The law seeks to encourage private investment in the sector by offering subsidies for companies that build new or expand manufacturing facilities and by helping pay for new research and development projects.

States have a role to play in the federal government’s strategy, especially in the training and development of the workforce needed, according to industry experts. And Texas stands out on the national stage because it already has one of the most robust ecosystems in the semiconductor industry.

The federal CHIPS Act seeks to encourage the reshoring of semiconductor manufacturing, which means bringing chip factories back to the country. The U.S. depends heavily on chip imports, especially from Taiwan and South Korea. And the possibility of China invading Taiwan — a territory that has declared its independence and has its own government, but which Beijing still considers part of China — has raised alarms about its impact on the supply of semiconductors.