The new semiconductor law aims to create “Silicon Valleys” in the United States

Little noticed in the bipartisan CHIPS semiconductor bill that President Biden signed into law earlier this month are the funds intended to transform where innovation happens in the U.S. Instead of sending money to traditional technology hubs like Silicon Valley in Northern California, Seattle or Boston, the law will create technology centers in many places, including small and rural places.

Most notably, the bipartisan $54.2 billion bill passed by Congress last month contains $39.4 billion in subsidies to try to restore the country’s standing in the production of chips, which are used in everything from cars to to washing machines, encouraging companies to make them in the market. USA The law has bolstered the hopes of cities across the countrylike Lafayette, Indiana, and Columbus, Ohio, because it will create jobs in their communities.

But also significant, said Brookings Metro Senior Fellow Mark Muro, is that the law provides $10 billion over five years to create 20 regional technology and innovation centers. And, he says, they can’t be in places “that are now leading technology centers.”

Instead, the law requires the Commerce Department to “ensure geographic and demographic diversity” by creating at least three centers in each of the US Economic Development Administration’s six regional offices.

At least one third of the centers must “significantly benefit a small and rural community, which the law defines as a metropolitan area with no more than 250,000 inhabitants. In addition, at least one of the 20 centers must be in a sparsely populated state that does not have an urbanized area with at least 250,000 people.

The requirements aim to reverse a trend in the nation, in which jobs based on innovation are being consolidated in some areas, Muro wrote in a recent report.

A separate 2019 Brookings Metro report found that because industries tend to cluster, between 2005 and 2017, 90% of job growth in innovation-dependent industries went produce only in five “superstar” metropolitan areas: Boston, San Francisco, San. Jose, Seattle and San Diego.

As a result, one-third of innovation jobs are concentrated in just 16 of the nation’s 3,006 counties, and more than half of jobs are in just 41 counties. Meanwhile, the share of these jobs was reduced to 343 metropolitan areas.

“Instead of growing together, the nation’s regions, metropolitan areas and cities have been drifting apart,” the 2019 report said.

“Over time we can see that it has led to big unevenness,” Muro said in an interview. In the areas being left out, “the best and brightest students are expected to rise to superstardom [areas]which leads to places with less and less talent.”

That trend has already led to the creation of “very thriving, often dynamic coastal centers,” he said.

“No one wants to dissolve the incredible power of these coastal centers, but we think that activity can be more widespread,” he said, speaking on behalf of the Brookings researchers.

In addition, Muro noted that the CHIPS Act also includes $1 billion in block grants for economic development in persistently struggling communities through the creation of a new RECOMPETE pilot program.

The money can support workforce development to implement regional semiconductor innovation strategies, such as programs at community colleges and those offered by other educational organizations that partner with local companies. It can also be used to reach workers in low-income neighborhoods and to create training and job placement services in places like churches, housing projects and community advocacy programs, and to support entrepreneurs.

Meanwhile, the CHIPS Act requires networks of institutions and groups in a region to come together to figure out what they would do if it became a semiconductor research center. Involvement with: higher education institutions is required; state, local or tribal governments; technological or manufacturing companies; economic development organizations; and job or job training organizations.

To become a hub, the region will need to use its “best assets,” Muro said Route Fifty. If successful, they would receive “a significant increase in research money” as well as funding for facilities to research and manufacture new forms of semiconductors, he said.

Thomas Sonderman, president and CEO of SkyWater Technology, said in an interview that he could see the company being part of a center that houses research and development in the same facilities as its manufacturing plants.

SkyWater announced in July that it will invest $1.8 billion to build a semiconductor plant near Purdue University in West Lafayette, Indiana. Sonderman said he could envision being part of research centers in Minnesota and Osceola County, Florida, where he is planning operations.

Integrating research with manufacturing, he said, would help the industry bring new products to market faster and compete with Taiwanese companies.

What they could produce could be groundbreaking, he said, noting that smartphones didn’t exist a generation ago. “Technology is moving at such a fast pace,” he said.

Localities win big

Local officials and economic development experts said the research centers could be a step toward diversifying economies in areas like the Midwest that have only recently begun to see the impacts of new technologies on their communities.

In West Lafayette, the city’s mayor, John Dennis, said the SkyWater plants will change the region’s economy. “The industry was just heavy smoke and black smoke. The concept has completely changed when you look at the technology,” he said.

The plants, he said, will go on a 400-acre site next to Purdue University, which the city annexed to be an industrial and research area. The SkyWater facility will be joined by a manufacturing and research plant announced by Swedish aerospace company Saab last year.

“It’s definitely a boom for our city,” Dennis said of the semiconductor plant. The project is expected to eventually double the city’s revenue. “It’s more investment and more jobs. More money for schools, more money for our businesses, for our city infrastructure, police and fire departments,” he said, as well as to serve the city’s underserved communities.

Meanwhile, in Licking County, outside Columbus, Ohio, Intel announced in January that it would spend $20 billion to build two semiconductor companies. The project is expected to create 7,000 construction jobs to build the plants and 3,000 permanent Intel jobs.

Intel had said it could invest $100 billion over time to build up to eight plants at the site.

Kenny McDonald, president and CEO of the Columbus Partnership, made up of major area companies, said the $39.4 billion in subsidies in the semiconductor bill will make Intel invest as much as it says it will.

“It really makes it happen,” he said.

The project is another step to help the region recover from the collapse of its housing market and banking industries during the subprime crisis of the early 2000s, he said. The region is diversifying, attracting a Google data center and $1 billion in venture capital investment last year for autonomous robotics health technology companies.

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