How the CHIPS Act will impact Texas

Gov. Greg Abbott and Samsung leadership formally announced Samsung’s roughly $17 billion chip plant is coming to Taylor, Texas, just northeast of Austin, on Nov. 23.

AUSTIN — Texas economic and manufacturing leaders are praising the new semiconductor bill that they say is sure to elevate the state’s role as a leader in chip production.

Last week, Congress passed the CHIPS and Science Act, a $52.7 billion bill that promotes domestic production of semiconductor chips, which are used in much of modern technology including cars, phones, computers and medical equipment.

Robert Allen, president and CEO of Texas Economic Development Corporation. said Texas will “benefit tremendously” from the CHIPS Act.

 

“There were several articles written over the last couple of days about how Texas will likely be the lead beneficiary from the CHIPS Act, and I wholeheartedly agree,” Allen said. “This is certainly good news and certainly welcome news for the state of Texas in terms of our ability to continue to shine as the premier state for the semiconductor industry.”

Gov. Greg Abbott and Texas Economic Development & Tourism Executive Director Adriana Cruz made it a top priority to recruit semiconductor projects, touting the state’s ranking as the best state to do business, with its tax incentives and a growing workforce.

Because of this, they say Texas has laid the groundwork for what will likely be a windfall of major semiconductor investments, followed by related supply chain companies that find it beneficial to be located near customers. The CHIPS Act also included incentives to shore up domestic supply chains.

Then comes the multiplier effect, which refers to the impact an investment will have on jobs and an economy. According to the Economic Policy Institute, for every 100 direct jobs created in semiconductor manufacturing, there are 192.2 indirect jobs created.

So each major Texas announcement not only brings thousands of high paying tech jobs to work at the new plants, but tens of thousands of ancillary jobs including those in the dining, retail and hotel sectors. This will also mean more homes and roads will need to be built, furniture and cars will need to be purchased, and schools will be filled with kids, further adding jobs, said Tony Bennett, president of the Texas Association of Manufacturing.

“Just bringing the semiconductor manufacturing sector to your community has an extremely high rate of return for the region,” Bennett said. “It's not just the semiconductor fab that you're going to win as far as job creation and economic activity, it's literally the hundreds of vendors and suppliers that will keep that plant operating for decades.”

Texas is currently the leading state in semiconductor chip production with over $50 billion worth of investment in the pipeline, said Glenn Hamer, president and CEO of Texas Association of Business.

This includes the recent wins of securing Samsung’s $17 billion investment — and possibly a $191 billion investment — for several semiconductor manufacturing plants outside of Austin; a Texas Instruments potential $30 billion expansion in Sherman; and a GlobalWafers $5 billion chip plant bid also in Sherman.

Hamer added that in the next decade or so, Texas could see closer to a quarter of a trillion dollars worth of semiconductor manufacturing activity.

 

“As we speak, Texas has the healthiest economy in America, (the bill) just this really ensures our long term prosperity,” he said.

Bennett added that while it may take years for these plants to stand up, in the meantime they create thousands of jobs in construction, pipefitting, 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 of your regional trades … thousands of jobs are created for the next two to three years. 

WHAT THIS MEANS FOR TEXAS

Overall, Texas manufacturing and economic experts say the CHIPS Act can only benefit the state and its residents. It will bring more high-paying jobs that will allow communities to flourish as they are able to bring in 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 with an annual growth rate of 4.5%. In the Dallas-Plano-Irving metropolitan division, the semiconductor manufacturing sector saw an annual growth rate of 3.4% in June 2022, it said. 

Bennett added that jobs themselves provide growth and educational opportunities that are beneficial for young people who do not wish to pursue college immediately after high school, as well as veterans seeking new career opportunities.

But Texas’s population is already exploding. According to the 2020 Census, Texas added four million more residents over the decade prior, and an estimated 1,000 people move to Texas everyday. That means a need for more resources such as water, transportation and reliable energy.

Hamer said he is not concerned about that, adding that Texas is making the needed investments to keep up with growth.

“We will meet the challenge,” Hamer said. “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 place for business than to be in the situation of states like California, Illinois and New York that are seeing businesses and people leave. “

He added: “Growth is good.”

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