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For years, the state has been the leading exporter of semiconductor chips. After the Legislature invested more than $1.5 billion into incentives since 2023, the industry has been booming.
leads the nation in exports of semiconductor chips , the small pieces that form the building blocks of all modern electronics, and the industry is currently experiencing a boom.
“It seems unprecedented relative to what I have seen since I got into the business in 1998,” said Steve Putna, director of Texas A&M’s Semiconductor Institute. “I think this ecosystem has been significantly replenished as a result of all the incentive funding we’ve seen. ” Federal investment and the flurry of data centers being built in Texas and across the country have expanded the industry even more.
In recent months, a series of new or expanded semiconductor fabrication plants, or “fabs,” have begun operating or been announced in the Lone Star State, including the launch of There are currently a total of 57 individual semiconductor facilities in the state, representing more than 47,000 workers across semiconductor fabrication plants, materials manufacturing and research and development, according to the The semiconductor institute, which broke ground on a $226 million research and development facility in Bryan in April, is part of the state’s, passed in 2023, to incentivize new semiconductor manufacturing in Texas as well as the research and workforce development that goes into it at the state’s universities.
From the law, Texas A&M University received the funding for the center and the University of Texas at Austin received $440 million for its own research and development center. State leaders used the rest — $698.3 million — to create the Texas Semiconductor Innovation Fund, which provides grants to companies seeking to build new or expand semiconductor manufacturing and design projects in the state.
That fund rose to nearly $950 million after the Legislature appropriated an additional $250 million last year. Since its creation, the fund has paid out $512.3 million in grants to 29 separate projects, totaling $9.3 billion in capital investment in Texas,“Texas is where the integrated circuit was born and where the future is forged,” Abbott said in a statement earlier this month, after announcing ato expand their semiconductor wafer fab in Richardson.
Abbott was referencing the invention of the integrated circuit, or the earliest version of the microchip, by Texas Instruments in 1958. A further eight innovation fund grants have been announced since the start of April across the state. A majority of the TSIF grants have gone to companies planning to operate in Central Texas, according to the Governor’s Office.
The U.S. was once the world leader in semiconductor manufacturing, producing about 40% of the world’s supply, but that share of the market has dropped to about 10% after companies sought cheaper labor overseas, primarily in Taiwan and South Korea, for the most advanced microchips.
The rapid growth of the industry is considered essential for U.S. national security by state and federal officials concerned with the nation’s dependence on foreign semiconductor manufacturing for the chips that power everyday electronics like cell phones and washing machines all the way up to the latest weapons in use by the Pentagon, Putna said.three years ago, allocating $52 billion to spur semiconductor manufacturing in the U.S. The law sought to encourage private investment by offering subsidies for companies that build new or expand manufacturing facilities, as well as investing in new research and development projects.
“That supply chain and the vulnerability of the Indo-Pacific to a potential military conflict and what impact that would have on our economy and national security is what got my got my attention,” said U.S. Sen. John Cornyn, R-Texas, and one of the lead negotiators of the law in the Senate.
“We’re just a good place to do business in Texas, and we make it easier, not harder. And I think that’s been another reason why we’ve been a leader in this industry. ” At the time the law was signed, Texas already had a robust ecosystem of chip manufacturing and research, and the Legislature sought to capitalize on that with the Texas CHIPS Act in 2023.
Cornyn credited the federal government’s investment and the additional money from state lawmakers for the recent wave of new semiconductor facility announcements in Texas. While the federal law pumped billions of dollars of investment into the industry, workforce development and training was considered necessary to support that growth, Putna said, which led to the creation of the research facilities at Texas A&M and UT Austin.
The facilities at both universities do not aim to manufacture chips for commercialization; instead, they will focus on piloting new products that meet market standards and training the future technicians, engineers and leaders of the industry, Putna said. The universities work with semiconductor companies on what to teach students to prepare them for working in the business. The growth is unlikely to stop any time soon.
Recent announcements by Nvidia and LITREON are primarily driven by the growth of AI and demand for semiconductor chips to fuel that industry, Putna said. Texas is on the front line of the data center buildout driving the need for semiconductor chips. The state currently has the second most data centers in the country and“The demand curb is not abating,” Putna said.
“That’s always a risk, that you overbuild and demand drops. Some of the prices of these companies just seem ridiculous, but the end demand is so strong you can actually justify it.
” Cornyn said he does not believe more federal subsidies are on the way any time soon, given the national debt, but the industry’s growth will continue, largely driven by AI and the federal government’s need for semiconductor chips built in the U.S. Disclosure: Texas A&M University, Texas Instruments and The University of Texas at Austin have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in The Texas Tribune’s journalism.
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