Utah is entering the business of chip manufacturing. It could be lucrative.

Utah is positioned to get a portion of a proposed $1.6 billion deal between the U.S. Department of Commerce and Texas Instruments, thanks to a federal program most of Utah’s congressional delegation voted against.

The deal is non-binding and in its early stages, according to an announcement Friday morning from the Department of Commerce, but would help fund three Texas Instrument chip manufacturing facilities, including an $11 billion semiconductor fabrication plant that opened last November in Lehi.

Gov. Spencer Cox celebrated the deal Friday morning, saying in a statement that Texas Instruments’ presence in Utah will “further the impact Utahns have on critical semiconductor technology.”

He also praised the deal on X. “Utah’s business-friendly economy welcomes this news!” Cox wrote.

The deal is being funded through the CHIPS and Science Act, which passed in Congress in 2022 and was a major plank in President Joe Biden’s economic agenda. Sen. Mitt Romney was the only member of Utah’s all-Republican delegation to vote in favor of the bill; all four Republican members of Utah’s U.S. House delegation, plus Sen. Mike Lee, voted against it.

Romney also celebrated the announcement and said in a news release that the proposed funding will “enhance Utah’s vital role in our national defense and economic success.”

“I was an original sponsor of the CHIPS and Science Act—which made today’s announcement possible—because in order to compete with China on the world stage, we must continue to promote innovation, foster scientific talent, and expand research here at home,” Romney said. “Texas Instruments’ expanded operations will strengthen the United States’ manufacturing capabilities to help break our country’s dependence on China for microchips.”

What’s a ‘foundational’ chip?

(Trent Nelson | The Salt Lake Tribune) Workers in a clean room at Texas Instruments' semiconductor fabrication facility in Lehi on Thursday, Nov. 2, 2023. (Trent Nelson/)
(Trent Nelson | The Salt Lake Tribune) Workers dress to enter a clean room at Texas Instruments' semiconductor fabrication facility in Lehi on Thursday, Nov. 2, 2023. (Trent Nelson/)

“Foundational” chips are the “building blocks for nearly all electronic systems,” the Department of Commerce said. The small semiconductors control all sorts of functions in all sorts of electronics, from airplanes and cars to medical devices and home appliances.

A chip shortage stalled manufacturing of many of these electronics — auto production, for example, decreased by 26% in 2021, according to research from J.P. Morgan — and helped drive inflation, federal officials said. Cars and other electronics got more expensive because they became briefly scarce.

“Americans across the country felt the impact of the semiconductor shortages during the pandemic,” Arati Prabhakar, a White House official in the Office of Science and Technology, said in a news release.

The CHIPS and Science Act was designed to bolster U.S.-based semiconductor research and production, which proponents say is good for the economy and national security. Texas Instruments is the latest in a string of U.S. semiconductor manufacturers to receive CHIP Act funding, behind companies including SK hynix and Amkor Technology.

“The historic CHIPS Act is enabling more semiconductor manufacturing capacity in the U.S., making the semiconductor ecosystem stronger and more resilient,” Texas Instruments president and CEO Haviv Ilan said in a news release. “Our investments strengthen our competitive advantage in manufacturing and technology as we expand our 300mm manufacturing operations in the U.S.”

Semiconductor manufacturing can use millions of dollars’ worth of water every day, according to some estimates, which Ilan acknowledged in November could be a concern in drought-stricken Utah. The Lehi facility will recycle water at nearly twice the rate of the current facility, Ilan said in November. Cox has also said he thought Utah had the necessary water infrastructure to support the plant.

Possible new jobs

All three Texas Instruments facilities — two in Texas and the one in Lehi — are expected to create more than 2,000 manufacturing jobs and “thousands” of construction jobs, according to the announcement from the Commerce Department.

Texas Instruments has estimated the Lehi facility will create 800 direct jobs in Utah once it’s up and running, plus thousands of indirect jobs. At its groundbreaking ceremony in November, Cox called the plant the “greatest single economic investment in Utah history.”

Opportunities for Utahns to work on the project may already exist.

Lehi’s new fab is still in the early stages of construction. The lead construction firm, Austin Commercial — the same company that led the Salt Lake International Airport’s new terminal — is finalizing contract details with Texas Instruments, Simeon Terry, an Austin Commercial company executive, told attendees of the inaugural Black Wealth Conference early this week.

Construction is expected to start in earnest in October, he said — and when it does, Terry said his job is to ensure minority-owned businesses in Utah can partner with Austin Commercial and participate in the project. Austin Commercial will spend a minimum of $250 million to partner with women and minority-owned businesses, Terry said.

There is no technical requirement that those businesses be Utah-based, but Terry told conference attendees Wednesday that partnering with local businesses is a priority. The project is expected to take 26 months to complete, and Terry said Austin Commercial is looking for contractors to contribute everything from construction to landscaping to food services.

The Minority Business Development Agency’s Utah Business Center is offering a six-week class to teach business owners how to bid for the Texas Instruments project and other projects of that scale starting in September. Interested business owners should contact the MBDA Utah office to learn more and register.

The Department of Commerce deal with Texas Instruments also includes a proposed $10 million in “dedicated workforce funding,” according to the announcement, that would help Texas Instruments fund new jobs at its new facilities.

Utah has offered Dallas-based Texas Instruments a post-performance tax credit of up to 30% of tax income generated over the next 20 years, or up to $34.5 million, according to the Governor’s Office of Economic Opportunity database.

The Commerce Department deal isn’t done yet. Friday’s announcement was preliminary and non-binding, pending “due diligence and negotiation of award documents” and “the achievement of certain milestones.” The final deal could differ from Friday’s preliminary offering, according to the department.

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Utah is entering the business of chip manufacturing. It could be lucrative.

Utah is entering the business of chip manufacturing. It could be lucrative.

Utah is entering the business of chip manufacturing. It could be lucrative.

Utah is entering the business of chip manufacturing. It could be lucrative.

Utah is entering the business of chip manufacturing. It could be lucrative.