Texas Instruments' multibillion-dollar microchip plant now open in Utah

LEHI — Once best known for its consumer products, like the iconic TI-81 calculator, Texas Instruments is now a fast-growing force in semiconductor manufacturing and one that got a foothold in Utah in June 2021 with the purchase of Micron Technology's Lehi microchip fabrication plant in a deal valued at $1.5 billion.

Since that time, Texas Instruments has made additional investments in the facility, known in the industry as a "fab," which includes multiple buildings with over two million square feet of space a few miles east of I-15 in Lehi. The fabrication facility has been in operation since the 1990s, previously specializing in building memory chips.

Now, a yearlong renovation is complete and the fab is in production, an ultra high-tech process that begins with a slice of pure silicon and ends, around 12 weeks later, with a wholly transformed 300 millimeter wafer that can contain hundreds, or even thousands, of tiny microchips.

Texas Instruments says the Lehi facility has plenty of room for future expansion and has $3 billion to $4 billion in investments planned for the Utah fab. Company executives note it's just one of multiple projects the company currently has underway as it works to greatly expand its semiconductor manufacturing capacity. A new chip fab facility in Dallas started production this year and a massive buildout is underway in Sherman, Texas, with two new plants under construction and two more in the planning stages.

Brian Dunlap, Texas Instruments' vice president for 300mm Wafer Fab Manufacturing Operations, said the Lehi facility is a key component in his company's overall expansion plans.

"We couldn't be more excited about the expansion potential here in Lehi," Dunlap said. "Our technology and capacity expansion road map ... is going to change our ability to be able to support our customers."

Why microchips matter

For something so tiny and mostly unseen by consumers, the terms used to describe the importance of the microchip might seem entirely out of proportion.

They are the foundation of modern life. The engines that drive innovation. The technology responsible for connecting the world. And they may be the key to the future of world security.

And, to be sure, you can find a microchip — also sometimes referred to simply as a chip, computer chip or integrated circuit — in virtually every device that requires power to operate and quite a few that don't.

There's one embedded in your cash card as well as your passport. The cellphone wouldn't exist without them, nor would your computer, your television or increasingly, any of your home appliances. Vehicles with gas engines have hundreds of them and next-generation electric cars have thousands. They're the actual brains behind every "smart," "connected" or "virtual" product out there and research is well underway to integrate these tiny electronic engines directly into our own brains.

Microchips are getting smaller, more powerful and are in such growing demand that manufacturers can't build the pricey and complex facilities that make them fast enough to keep pace.

While the U.S. is the birthplace of the technology that led to the microchip, and the country where almost 40% of the chips were once manufactured, that leadership position has declined dramatically over the past few decades. That diminished role was defined in the harsh light of pandemic-fueled supply chain disruptions where the lack of robust, domestic microchip supply upended the manufacturing processes for a slew of American-made goods that rely on them.

And while some relief has come as COVID-19 restrictions have lifted and global manufacturing volumes have returned to near pre-pandemic levels, industry experts predict shortages could remain an issue into 2024.

That economic lesson helped rally bipartisan support to pass a massive, $280 billion legislative package this summer. Backers of the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act are hoping the funding will help push the U.S. back into a command position when it comes to developing and manufacturing microchips.

What does the $280 billion CHIPS Act do?

The legislation provides more than $52 billion in grants and other incentives for the semiconductor industry as well as a 25% tax credit for those companies that invest in chip plants in the U.S. It also calls for increased spending on various research programs that would total about $200 billion over 10 years, according to the Congressional Budget Office.

In a statement following passage of the bill in July, Texas Instruments spokeswoman Ellen Fishpaw said the CHIPS legislation would provide a boost for U.S. chip makers as they vie for market share with powerful global competitors.

"We applaud Congress for passing the CHIPS Act," Fishpaw said. "This is an important piece of legislation that will boost domestic chip production and improve the U.S. semiconductor industry's ability to remain competitive.

"Texas Instruments has an exciting manufacturing roadmap, which includes investments in Lehi, and these provisions will be very meaningful to the development of wafer fabs to support semiconductor demand for decades to come."

Texas Instruments reported $5.2 billion in revenue in the third quarter of 2022 and $2.3 billion in net earnings. Overall revenues were up 13% from the same period in 2021.

In an earnings call following release of the third quarter report, Texas Instruments Chief Financial Officer Rafael Lizardi said the CHIPS Act was set to accelerate domestic chip production capacity and was already bearing benefits for the Dallas-based company.

"The combination of the investment tax credit, the grant as well as funding for research and development will help make the U.S. semiconductor industry more competitive," Lazardi said. "We accrued about $50 million on the balance sheet in third quarter due to the 25% investment tax credit for investments in our U.S. factories."

Texas Instruments' Utah investment is big for a lot of reasons

The Lehi chip fab plant is the only one of its kind in Utah but besides the billions of dollars in investment it's attracted as a stand-alone facility in the state, industry watchers say its economic impact will extend far beyond its 700-acre site.

Stephen LeFevre, chief of staff and director of strategic and foreign affairs for World Trade Center Utah, said investments like the one Texas Instruments has committed to in Lehi are setting up for positive, exponential downstream impacts on Utah's economy.

"Texas Instruments' investment creates an external economy of scale," LeFevre said. "Other related industries will continue to grow and develop and bring more and more similar and related businesses to Utah."

Besides being a powerful attractor of additional business interest in Utah, LeFevre said the plant itself will be a talent incubator, via Texas Instruments' robust internship program which is set to offer emerging tech professionals with real-world experience in some of the most advanced technology areas.

And, he noted Texas Instruments' confidence in making such a huge bet on Utah is further evidence that the state is on point when it comes to its portfolio of core essentials attracting more big interest from big businesses.

"I think there's a growing acknowledgment of Utah's fertile engine for investments like this," LeFevre said. "Our highly educated population, homegrown tech talent, business-friendly policies and high levels of coordination across the public and private sectors all set us up well for more success stories like this."

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