A bill that could help chipmakers like Micron Technology expand in the Gem State is moving forward to the Idaho House floor.
As BoiseDev reported last week, the legislation, HB678, would provide a break on sales tax to purchases of materials and construction goods for a chipmaker to construct or modernize a semiconductor manufacturing facility.
Semiconductors are ubiquitous computer chips found in everything from phones to dishwashers to cars and nearly every piece of electronics sold today. Boise-based Micron is one of the world’s largest chipmakers, and is one of several chipmakers with operations in Idaho. Jake Reynolds with the Idaho Dept. of Commerce said there are 50 chipmaking facilities in Idaho with an impact on the state’s gross domestic product of over $2.5 billion.
The Dept. of Commerce provided legislators with three ”example” projects in its pipeline for the state. It outlined a set of “small, medium and large” projects, valued at $12-million, $24-million, and $1.8-billion respectively. Commerce officials have called these ”examples,” despite the highly precise figures on the large example. Commerce officials have not commented on specifics, though legislators have used descriptive language including “possible” and ”potential.”
Three sources with knowledge of Micron’s plans who were not authorized to speak about the project told BoiseDev that Boise is in line to land a large manufacturing expansion for Micron. The plant off Federal Way currently hosts both corporate offices and a so-called research and development fab – or fabrication – plant. The company formerly made production chips in Boise, but most of that work is now done elsewhere – particularly overseas.
From Trump – to Biden
The federal government under former President Donald Trump began work to bring chip manufacturing back to US soil, according to Reynolds.
“As the pandemic hit the US in 2020, the Trump administration started noticing a process to jump-start the development of new chip factories in the United States,” Reynolds said. “There was growing concern about our relying on Asian factories.”
In June of 2021, the US Innovation and Competition Act passed the US Senate on a bipartisan basis by a vote of 68-32. Both Idaho Senators Jim Risch and Mike Crapo voted for the legislation. It included a $52 billion incentive for domestic chip manufacturing known as the CHIPS act.
Legislation working its way through the US House also includes the CHIPS act funds.
Last night, in this State of the Union address, President Joe Biden urged passage of the funding and incentives.
“Folks, to compete for the jobs of the future, we also need to level the playing field with China and other competitors,” Biden told Congress. “That’s why it is so important to pass the Bipartisan Innovation Act sitting in Congress that will make record investments in emerging technologies and American manufacturing. We used to invest 2 percent of our G.D.P. in research and development. We don’t now. China is.”
Keeping Idaho competitive
Idaho Rep. Dustin Manwaring, R-Pocatello, said the bill is important to keeping Idaho competitive for the potential federal incentives. The legislation is tied to the final passage of the CHIPS act, and would only go into effect if federal lawmakers come to an agreement and the president signs the legislation.
“We’re pretty much already a big deal in chip manufacturing and development,” Manwaring said. “But this ensures our Idaho companies can be in a good position for federal funding, including the CHIPS act.”
Reynolds said Idaho is competing with other states like Texas and Ohio for semiconductor manufacturers to expand. Biden highlighted Ohio and plans for a large expansion by Intel that partially hinges on the CHIPS act during his State of the Union.
Manwaring told the Idaho House Revenue and Taxation committee the bill has no cost to implement, and has a total fiscal impact on the budget of $18 million if all three qualifying projects are built. He said it would generate $620 million in new wages. Reynolds said those wages would come through jobs that would pay an average of $135,000 per year.
Rep. Tammy Nicols, R-Middleton, supported the legislation moving forward to the House, but expressed caution.
“I’ve been hearing a lot from constituents out in Kuna and those areas and they are very concerned about what’s transpiring with the new Meta facility that’s going up,” she said. “I just really question these incentives and bringing these businesses to our state. I just wonder where this ends as far as incentives go. Are we going to start giving small businesses incentives? I don’t know but maybe we should look at that.”
She said she reserved the right to vote against the bill on the house floor, but joined in a unanimous vote to pass it to the floor with a “do pass” recommendation.
Micron looking for breaks
Micron CEO Sanjay Mehrotra told Bloomberg TV last week that incentives are a key factor in the company choosing to expand production on US soil. He said there is a 45% price difference for domestic manufacturing versus production overseason.
Micron would have significant incentive to expand in Idaho. In addition to the possible sales tax exemption, the company enjoys a permanent cap on its property tax in the state no matter how much it expands due to 2008 legislation aimed at landing a different company that never expanded to Idaho. With the latest legislation and 2008 law, Micron would not pay sales tax nor any property tax to expand in Boise, if it is the company behind the ‘example’ $1.8 billion expansion.