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SALT LAKE CITY — Utah Gov. Spencer Cox on Wednesday announced what his office called the "largest private economic investment in state history."
The investment? An $11 billion expansion of Texas Instruments' microchip fabrication plant based in Lehi.
"This is a huge day for team Utah," Cox said during the announcement in the Gold Room at the Utah Capitol, which was packed with dignitaries including Texas Instruments' incoming CEO Haviv Ilan and Rep. Burgess Owens.
That expansion will bring a second chip factory to the Lehi plant, which currently employs about 1,100 people, and add about 800 more jobs to Utah's tech corridor known as Silicon Slopes.
"These are high-paying jobs," Ilan said, with an average salary of $110,000.
In total, the project is projected to produce over $2.4 billion in wages and over $111 million in new state tax revenue over 20 years, according to estimates from the governor's office.
"We will put a lot more silicon into the Silicon Slopes," said Ilan, who is currently Texas Instruments' executive vice president and chief operating officer. He will be the company's new president and CEO as of April 1.
Texas Instruments designs and makes semiconductors that are then sold to electronics designers and manufacturers all over the world. Headquartered in Dallas, the company has design, manufacturing and sales operations in more than 30 countries with around 33,000 employees worldwide.
Construction of the new facility is expected to begin in the second half of 2023, with production expected as early as 2026, according to Texas Instruments.
Why Utah?
"Utah was not their only option" for expansion, Cox said, "So it matters that they chose us."
Texas Instruments chose to expand in Utah, Ilan said, because of the Beehive State's talented workforce and the company's long-term vision. The announcement comes after Texas Instruments purchased Micron Technology's Lehi plant in 2021, valued at $1.5 billion.
"Our decision to build a second fab in Lehi underscores our commitment to Utah, and is a testament to the talented team there who will lay the groundwork for another important chapter in TI's future," Ilan said. "With the anticipated growth of semiconductors in electronics, particularly in industrial and automotive, and the passage of the CHIPS and Science Act, there is no better time to further invest in our internal manufacturing capacity."
Sen. Mitt Romney, R-Utah, issued a statement applauding the announcement.
"Utah continues to be a great place to do business, and today's announcement further proves that," Romney said. "I was proud to support the legislation that made this historic investment in our state possible, which will strengthen our country's manufacturing capabilities and help break U.S. dependence on China for microchips."
Romney added the U.S. "must continue to promote innovation, foster scientific talent, and expand U.S. research if we are going to compete with China on the world stage, and today's announcement is a strong step in the right direction."
Last summer, Congress passed a massive, $280 billion legislative package known as the Creating Helpful Incentives to Produce Semiconductor and Science Act to push the U.S. back into a commanding position when it comes to developing and manufacturing microchips. 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.
Effect on supply chain
In a statement following passage of the bill in July, Texas Instruments spokeswoman Ellen Fishpaw said the legislation's provisions "will be very meaningful to the development of wafer fabs to support semiconductor demand for decades to come."
Scott Cuthbertson, president and CEO of EDCUtah, said Texas Instruments' Lehi project "represents a significant step toward strengthening the U.S. supply chain."
"The federal government recognized at the front end of the pandemic that our country's reliance on overseas semiconductor manufacturing is a national security issue," Cuthbertson said. "Texas Instruments' commitment of this transformational investment will have a lasting impact on Lehi and Utah's manufacturing industry for generations."
Lehi Mayor Mark Johnson said his city welcomes Texas Instruments as a community partner.
"TI has brought great opportunities to our city, our state, and our country at a critical time in the semiconductor industry," Johnson said. "We are excited for our relationship to continue with TI regarding this expansion."
Tax breaks
Asked how many tax breaks were given to Texas Instruments to facilitate the expansion, Ryan Starks, executive director of the Governor's Office of Economic Opportunity, told reporters Utah offered the company to pay 30% of new state taxes over 20 years in the form of a post-performance refundable tax credit known as the Economic Development Tax Increment Financing tax credit.
Each year that Texas Instruments meets the criteria in its contract with the state, it will qualify for a portion of the total tax credit.
The deal is expected to save Texas Instruments up to $34.6 million in taxes over 20 years, according to the governor's office.
"The investment is significant, and so we just capture a percentage of that investment and give it back to the company," Starks said.
What about water?
The announcement comes as Utah and the West remains in the grip of an unprecedented drought.
Asked whether Utah's water capacity can support the expansion, Cox told reporters water has been a "topic of discussion from the very beginning" with Texas Instruments.
"There is a lot of work happening in this space," Cox said. "The water is available, so that's the good news. And TI is working very high on the design phase of this to make sure they will use less water, be able to reuse that water in the process. ... And we feel very good about the projections around the water usage and the existing water in that system right now."
Texas Instruments said the new fab will be "designed to meet one of the Leadership in Energy and Environmental Design (LEED) building rating system's highest levels of structural efficiency and sustainability: LEED Gold."
"Plans include recycling water at nearly double the rate of the existing Lehi fab," the company said in a news release. "Advanced 300-mm equipment and processes in Lehi will further reduce waste, water and energy consumption per chip."
