Oregon’s chance for semiconductor hub diminished by Trump victory, Intel tension with Biden administration - oregonlive.com

Intel and Oregon economic development officials have been courting a national semiconductor research hub that could bring nearly $1 billion in federal spending to Washington County. Intel photo

Oregon’s chance of winning a federally funded semiconductor research hub, one of the state’s top economic priorities, appears in jeopardy after President-elect Donald Trump’s victory at the ballot box and mounting tension between the Biden administration and Intel.

Three people with direct knowledge of discussions between the Commerce Department, Intel and Oregon say the state’s chances of winning a site appear to have diminished considerably over the past week.

Oregon continues to press for one of the research hubs and officials say they remain hopeful. But some people close to the discussions say they feel the Biden administration — due to choose a site before the end of the year — is now focused on other states. The three sources declined to speak on the record because of the sensitivity of the ongoing negotiations.

Losing out would be a major setback for one of Oregon’s foundational industries and could cost the state nearly $1 billion in federal investment. Coupled with Intel’s ongoing struggles, it would also amplify uncertainty around the future of Oregon’s semiconductor economy.

The Commerce Department awarded two National Semiconductor Technology Center sites this fall, one in upstate New York and another in Silicon Valley.

Intel, which does its most advanced research in Hillsboro, and Oregon economic development officials remain hopeful of winning the last of the research hubs. That’s a packaging and prototyping facility that could be awarded to one state or split between two. It could bring hundreds of millions of dollars in federal spending to Oregon and could anchor the state’s semiconductor industry for generations.

“We are clearly the right place if you’re serious about national security and about maintaining United States leadership in advanced manufacturing,” said Duncan Wyse, president of the Oregon Business Council, which helped craft the state’s semiconductor strategy. He said Oregon has the highest concentration of chip factory workers and designers in the nation and is therefore the logical place for an NSTC site.

“We think we will win on the merits and on the relationships,” Wyse said Thursday. “I think we’ve had great conversations, from the secretary of commerce and at all levels.”

U.S. Sen. Ron Wyden, D-Oregon, was a leading advocate for the CHIPS Act in Congress. On Thursday, he said the concentration of semiconductor manufacturing in Oregon still makes it the logical choice for an NSTC site.

“Our state remains the best contender for a National Semiconductor Technology Center that can cement our entire country’s status as a global leader in domestic semiconductor protection and innovation,” Wyden said. “Landing one of these centers in the Silicon Forest would be another big win for jobs in our state, for national security and for building an even stronger industry able to compete and win against China.”

The National Semiconductor Technology Centers were authorized by the 2022 CHIPS Act, federal legislation that allocated $52 billion to revive the domestic semiconductor industry. Winning one of the NSTC sites has been a key element of Oregon’s strategy for boosting chip manufacturing in the state and is also a top priority for Intel.

“Intel believes Oregon offers the strongest ecosystem for an NSTC facility and appreciates that state and federal leaders are fully committed to securing the state’s competitiveness,” the company said in a written statement Thursday. “Oregon is uniquely positioned to contribute to the success of the NSTC and help drive technological advancements in the U.S. semiconductor industry.”

Gov. Tina Kotek has been preparing to designate 373 acres of rural land near Hillsboro for industrial development to make room for a research site and associated projects. That’s been a contentious decision because Oregon conservationists want to preserve the area as farmland.

Under state legislation passed last year, Kotek has until the end of December to decide whether to follow through with plans to bring the land into the Portland area’s urban growth boundary. The legislation links the decision to federal CHIPS Act funding, so if the Commerce Department passes over Oregon, Kotek would be unlikely to make those 373 acres available for development.

People familiar with the research site decision process say Trump’s victory complicated matters in Washington, D.C.

Though Trump considered similar incentives during his first term, he was critical of the CHIPS Act on the campaign trail this year. Some believe the second Trump administration would be less supportive of the program if the three research sites go to three reliably Democratic states — New York, California and Oregon — and might even try to reverse the site selections.

Awarding an NSTC site to Texas or Arizona, both of which are said to have submitted strong bids, could help ensure the Trump administration would back the program in the future.

Additionally, Intel and the Biden administration appear to have had a falling out and the company’s deteriorating financial condition has federal officials wary of additional commitments.

Intel was a major backer of the CHIPS Act and helped steer its passage through Congress. Intel CEO Pat Gelsinger was President Joe Biden’s guest at the State of the Union in 2022, when Biden was making the case that federal support for the semiconductor industry would reduce nation’s reliance on Chinese technology.

Intel is the nation’s largest and most advanced domestic semiconductor manufacturer and was a focal point of the Biden administration’s efforts to restore American leadership in chip production.

Last March, the Biden administration preliminarily awarded Intel $8.5 billion in direct subsidies from the CHIPS Act and $11 billion in low-interest federal loans. Intel’s incentives are the largest awarded to any company under the CHIPS Act.

But Intel’s outlook darkened over the summer, as sales badly missed the company’s forecast and the chipmaker announced plans to slash spending by $10 billion next year and eliminate 15,000 jobs. Intel laid off 1,300 Oregon workers last month and posted a $16 billion loss in the third quarter, driven mostly by accounting charges triggered by the company’s reduced expectations of future profitability.

Some stock analysts and industry observers have proposed breaking up Intel, separating its design and manufacturing business. Reports in the financial press indicated rivals had contemplated trying to buy all or part of Intel’s business.

Amid the turmoil, Intel hasn’t actually received any of the CHIPS Act funding announced last March. Reports indicate the company and Commerce Department are trying to work through differences over what the chipmaker would have to do to qualify for the money.

Meanwhile, Gelsinger has been increasingly vocal about his dissatisfaction with the funding delays. Then last week, he blasted the Biden administration during an all-company meeting.

“I don’t think that shows well on the current administration that it’s taken this long and it’s been this bureaucratic to get this across the line,” Gelsinger said.

Two people familiar with discussions related to the NSTC say Gelsinger’s comments alienated administration officials and reduced their enthusiasm for working with Intel. That, in turn, has diminished Oregon’s chances of winning a research hub championed by Intel.

On Wednesday, Gelsinger joined other tech executives saluting Trump on social media after his election victory.

“We congratulate President-Elect Trump and Vice President-Elect Vance on their victory and look forward to working with their administration to advance America’s technology and manufacturing leadership in the world,” Gelsinger wrote on X.

-- Mike Rogoway covers Oregon technology and the state economy. Reach him at [email protected] or 503-294-7699.

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