Kansas pledges $304 million to chip factory to attract federal funds

Kansas plans to give $304 million in taxpayer-funded incentives to a semiconductor company in its largest city to build a giant new factory, but the project won’t progress without it. has funds that the US government has promised to rebuild the nation’s chip-making capacity.

Governor Laura Kelly announced Thursday that Kansas has an agreement with Integra Technologies, based in Wichita, for a 10-year tax relief and cost reimbursement package. State officials say the new $1.8 billion plant will cover 1 million square feet, employ 2,000 employees and create 3,000 more jobs among suppliers and others. local business.

The announcement comes as the United States is trying to remedy the loss of chip production critical to smartphones, laptops and other modern gadgets, as well as cars and lifesaving medical equipment. Congress last year passed a measure providing more than $52 billion in grants and other incentives to the semiconductor industry.

Kelly told reporters at a Statehouse news conference that state incentives are crucial to attracting federal funds and “making Kansas an essential part of national security efforts.” of our country.”

“This state-of-the-art manufacturing facility is part of a national effort to revitalize our semiconductor industry so American workers and businesses can compete and win the race into the Century. 21,” Kelly said.

Integra CEO Brett Robinson would not say how much federal funding the company needs, only saying there is “no commercially viable way” to take on the project without it. He and state officials said other states were trying to attract the project, though they did not disclose competitors.

“It’s not just important for the United States and its security, it’s important for supply chain“, said Kansas Senate President Ty Masterson, a Wichita-area Republican.

President Joe Biden pushed Congress last year to promote America Semiconductor industry, as chip shortages worsened by the global coronavirus pandemic and concerns about competing with international rivals, especially China. There has been a decades-long shift to cheaper Asian chip factories, and the industry is now dependent on Taiwan, which China has long been claim to be yours.

“If we ever lost access to the Southeast Asian supply chain for a long period of time, what we just experienced pales in comparison,” says Robinson.

Integra, founded in 1983, has about 500 employees in Wichita and Silicon Valley and describes itself as the largest U.S. supplier of the last two major testing and assembly steps in the manufacturing process. chips. The new factory is expected to pay an average annual salary of $51,000, about 46% higher than the state average of about $35,000.

For Integra to receive the incentive, it must invest at least $1.5 billion in a new factory over the next five years and continuously provide the equivalent of 1,600 full-time jobs for 10 consecutive years.

The incentives are part of a program Kansas created last year to ramp up efforts to compete with other states for large, new plants. Under that program, the state is allowed to offer incentives of up to $1 billion per company in 2022 and 2023.

In July 2022, Kelly and others state officials announced that Panasonic Corporation plans to build a super factory to produce electric vehicle batteries for Tesla and other automakers. The state lured the Japanese electronics giant’s project to the edge of the Kansas City area with $829 million in incentives over 10 years, the highest the state has ever offered.

The law allowing incentives that require top leaders of the Republican-controlled Legislature to conclude any agreement between a company and the state’s Department of Commerce, led by Lt. Governor David Toland, a Democrat like Kelly, is at the top. Legislative leaders approved just minutes before the announcement, after meeting Kelly privately for half an hour to review the deal, with no opportunity for public review or comment.

The law also requires Kansas to reduce its corporate tax rate by 0.5 percentage points for each large sale. If the Integra project continues, the top rate will drop from 7% to 6%, saving all corporations about $100 million per year.

Although both megaprojects enjoy bipartisan support, some lawmakers have criticized the promise of such massive taxpayer-funded incentives to a single company.

“We haven’t written a check on this first project yet, and they’re starting a second project without even knowing it’s working,” said Senate tax committee chairman Caryn Tyson, a conservative Republican from eastern Kansas, said ahead of Thursday’s announcement.

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