Oregon semiconductor aid plan takes shape

By PETER WONG
Oregon Capital Bureau

Oregon lawmakers are gearing up a $200 million plan to secure some of the $52 billion available in federal aid to encourage domestic manufacturing of semiconductors.

As a joint committee continues hearings, business and government leaders have told members that the emerging plan — much of it proposed as an amendment to Senate Bill 4 — will boost Oregon’s workforce, businesses and the economy if it can secure federal money.

They say potential benefits are not limited to one region or one company. Though half of the 16 communities specified in the bill as potential industrial sites are in the Portland metro area, among the others are Hermiston, Medford and Redmond.

The two Senate leaders of the joint committee say a plan is urgent — and legislative leaders say action is likely in March.

“We are acting with an extraordinary sense of urgency to supercharge Oregon’s semiconductor industry, bring new jobs and money to our state, and build a better future for every Oregonian,” said Sen. Janeen Sollman, a Democrat from Hillsboro and the Senate co-chair, whose district includes much of Oregon’s Silicon Forest.

Senate Republican Leader Tim Knopp of Bend is one of the two top Republicans on the panel.

“This bill is an important first step in ensuring Oregon’s semiconductor industry can capitalize on the opportunity to receive CHIPS Act (federal) funding,” he said. “Our next step needs to be bold and needs to provide more support for our job creators.”

Metro area communities specified in the bill: Hillsboro, North Plains, Sherwood and Tualatin; Happy Valley and Wilsonville; Gresham, and Scappoose.

Economic benefits

Duncan Wyse, president of the Oregon Business Council, said recent graduates of such programs as microelectronic technology at Portland Community College have already shown their value in securing high-paying jobs.

“You have heard from graduates of universities and community colleges and how their lives have been changed,” said Wyse, whose council did the staff work for a state task force last summer. “For equitable prosperity, this is the best opportunity Oregon has seen in a generation.”

Wyse also referred to a recent report by the Portland firm ECONorthwest, which said Oregon could gain $2.8 billion in state tax collections over the next two decades — and that an investment of $100 million would be recouped in just two years.

The plan builds on the $200 million that Gov. Tina Kotek has recommended in the two-year budget of the Oregon Business Development Department. The agency would help businesses and others secure federal money based on a yet-to-be-specified number of jobs created and at least $1.5 million generated for state and local governments.

Advanced manufacturing is also one of three economic sectors — the others are construction and health care — that are the focus of Future Ready Oregon, a $200 million training program proposed by then-Gov. Kate Brown and approved by the Legislature in 2022. The program is aimed at helping people who have been left behind in previous economic recoveries gain the skills needed for higher-wage jobs.

The Oregon plan envisions agreements with universities and community colleges to provide high-tech training.

Wyse said that while Oregon semiconductor manufacturing is largely centered on Washington County and the Portland metro area, “every county is touched” by economic benefits from suppliers.

Angela Wilhelms, president of Oregon Business & Industry — which represents business interests — said the plan is about more than a single business or region.

She said:

“This is about supporting employers creating thousands of high-paying jobs, while also supporting small businesses providing materials, equipment and services into the manufacturing supply chain.”

“The framework released last week is a great start,” she added. “It’s more than just an acknowledgement that we care about attracting business. It provides an important tool to help attract significant investment.”

Tax breaks?

Advocates also want lawmakers to renew a property tax exemption by cities and counties known as enterprise zones — a Senate committee already has heard testimony — and reinstate a tax credit for research and development. But critics of the latter say that businesses do not need that tax break, which is subtracted directly from taxes owed, and that state efforts should be focused directly on the desired industries.

Curtis Robinhold is executive director of the Port of Portland, Oregon’s largest owner and developer of industrial lands. The port is also Oregon’s hub for international trade via air and sea.

Robinhold said the export of semiconductors and other electronic components accounted for $8.2 billion, half of the value of all Oregon exports in 2020.

“I think there is more to do here … this doesn’t have to happen all at once,” he said. “But we need to take steps every opportunity we get.”

Dispute over land use

The task force report said that based on business searches, Oregon has no large sites of 500 acres or greater to accommodate a semiconductor assembly plant.

There are two potential large sites in Washington County. North Plains has a pending request to the state land use planning agency to expand its urban growth boundary to include it. The other site is outside Hillsboro’s urban growth boundary. Hillsboro Mayor Steve Callaway says the Legislature should put it in, despite a 2014 law that kept it out and designated “rural reserves” off-limits to development for 50 years.

The amended bill proposes that Gov. Kotek be empowered temporarily to redraw urban growth boundaries after an analysis of 16 specified cities. The aim is to secure two developable sites, if one is at least 500 acres; four sites, each between 100 and 500 acres, or six sites of 100 acres.

“We really believe we need a range of land opportunities to build out the semiconductor ecosystem across multiple sites,” Robinhold said. “We are deeply short on large-scale sites, small and mid-sized sites as well. So we need to do something short term to make sure land is available.”

But this provision has drawn opposition from the Oregon Farm Bureau Federation and the land-use watchdog group 1000 Friends of Oregon. Representatives from both testified on Feb. 23 that lands already within urban growth boundaries should be considered and developed first.

Oregon’s land use planning law, which dates to 1973, confines most development within those boundaries and protects most of the rest for farming and forestry. The Legislature did empower the state to bypass some of those planning requirements in 1989, when a 3,000-bed state prison was being sited. Snake River Correctional Institution, now Oregon’s largest, was built outside Ontario.

National context

Oregon already ranks third in its semiconductor manufacturing workforce, behind only California and Texas. At 40,300, it’s 15% of the national total. Intel, the largest U.S. manufacturer based in Santa Clara, California, has four plants in Hillsboro and Aloha — it is Oregon’s largest private employer with more than 20,000 workers — and opened its most advanced research and development facility last year in Hillsboro.

But other states are in competition for money from the U.S. Department of Commerce, which has laid out guidelines and is set to announce a process for distribution of the $52 billion. Another $200 billion from the 2022 law, known as the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act, is available for advanced scientific research.

Among them are Arizona, where Intel and Taiwan Semiconductor Manufacturing Company have plants; New York, where Micron has announced a multibillion-dollar investment, and Ohio, where Intel has made a similar commitment. Intel’s announcement last year spurred the formation of the Oregon task force.

President Joe Biden signed the CHIPS Act last summer in recognition that most semiconductors — first developed in the United States — are made in China, Taiwan and elsewhere in Asia. Taiwan is a self-governing country, but China regards it as a renegade province. The United States has a one-China policy, but opposes any Chinese use of military force to control Taiwan.

Oregon semiconductor aid plan takes shape