Microchip Technology is contemplating a major expansion to its factory in Gresham, according to Oregon officials with direct knowledge of the conversations, which could bring substantial new investment and hundreds of new jobs while extending the site’s future for decades.
Microchip’s potential investment comes amid an unprecedented domestic building boom among chipmakers, with major new factories planned in Arizona, Idaho, Texas, Ohio and New York. Manufacturers are rushing to capitalize on a leap in demand for computer chips during the pandemic and $280 billion in new federal incentives for semiconductor research and manufacturing.
Oregon has so far missed out on all that construction, even though the Portland area has one of the densest concentrations of chip manufacturing in the nation. That’s largely because the region lacks the large plots of industrial land big chipmakers seek.
Microchip’s potential expansion wouldn’t be nearly as large as the “megafabs” that Intel, Micron, Samsung and others are building in other parts of the country. But it could be an important signal that Oregon remains in the game.
Conversely, if Microchip chooses to build elsewhere it could raise fresh questions about Oregon’s viability as a destination for growing chipmakers.
“Due to the complex nature of this topic and the rules surrounding the review of this matter, there is nothing we can say publicly right now,” Sarah Cagann, spokesperson for Gresham, wrote in an email Wednesday.
Microchip declined comment and Oregon’s economic development agency did not respond to inquiries about the project.
It’s not clear just how big Microchip’s Gresham investment would be, what factors are weighing on its decision, or how close it is to making a call on where or when to proceed.
City records show Microchip’s existing 827,000-square-foot factory and associated development occupies only half of its 140-acre Gresham property on Southeast Stark Street. The remaining land is undeveloped.
It’s not clear just what it would take to land Microchip. The Gresham factory is the Arizona-based company’s largest. But it also has factories in Colorado, the Philippines, Thailand, Pennsylvania and Germany.
Some large chipmakers, notably industry heavyweights Intel and Nvidia, are struggling this year amid falling demand for PCs and a saturated data center market. But demand for Microchip’s products continues to soar, with second-quarter sales up 25% over the same period last year.
Microchip makes chips that play an essential supporting role in operating industrial equipment, cars, planes, communication networks, medical tools and many other products. The company said production at its Gresham factory doubled in the pandemic’s first year as Microchip rushed to address a global chip shortage and employment has grown to 864 employees.
The Arizona company has continued expanding since then and said Wednesday it has 150 contractors working to install more than 160 new manufacturing tools inside the existing Gresham factory.
Microchip said it has added 250 employees in the past two years with plans to add 300 more over the next two years. It’s working with Portland Community College and Mt. Hood Community College to prepay tuition and other costs for part-time employees who are earning electronics degrees while working as Microchip technicians.
A task force of government and business leaders set out plans last summer to make Oregon more attractive to semiconductor manufacturing by increasing the inventory of industrial land, expediting environmental reviews, increasing public incentives and investing in workforce development.
The task force said in August that Oregon was courting three unnamed chipmakers for potential expansions with a combined value of $8 billion. It wasn’t immediately clear whether Microchip’s expansion was among the three under consideration at that time.
Gov. Kate Brown, who co-chaired the task force, is preparing a package of legislation she hopes lawmakers will consider on “Day One” of their next session early next year. In the interim, she has set aside $1 million to ready existing industrial land for development and secured legislative funding to speed environmental permitting.
The governor has warned that Oregon is in a “50-state competition” for a share of the federal chips spending and must move quickly to land chip manufacturers that are making their site selection decisions over the next several weeks.
Oregon chip manufacturing jobs pay annual wages that can start around $60,000 and entry-level jobs typically require no more than a two-year associate degree. Boosters say the industry represents a chance to make high-wage jobs available to a diverse population of Oregonians.
A panel of Oregon lawmakers met Tuesday with members of the Oregon Business Council, which shepherded the chips task force, to discuss the future of the state’s semiconductor industry.
“We see this as being a real opportunity to create generational wealth and an opportunity for equitable economic development that we might not see again,” said the business council’s Andrew Desmond.
Rep. Janelle Bynum, chair of the House’s economic development committee, is leading efforts to build legislative support for luring more chipmaking to Oregon. She said lawmakers need to be persuaded to act on the rapid timetable the governor and chips task force have been pushing.
“There is an inherent skepticism any time you say, ‘This needs to be done with urgency.’ Legislators are very meticulous, and they want to get it right,” Bynum said. She said her colleagues are asking for specifics about land availability, whether chip investment could take place outside the Portland area, racial impact of the development and the environmental implications of new projects.
Businesses often make decisions rapidly, and Bynum said the state Legislature isn’t set up to move that fast. So she said her goal is for the state to empower local governments with the land, incentives and other tools to work directly with expanding chip manufacturers.
“We need to put the right pieces in place so that cities and counties and industry can be nimble,” Bynum said.
Microchip paid $184 million for the Gresham factory in 2002, acquiring it from Fujitsu Microelectronics several months after Fujitsu shut down its own operations there.
Update: This article has been updated with additional detail on Microchip’s Gresham operations.
-- Mike Rogoway | mrogoway@oregonian.com | 503-294-7699 | Twitter: @rogoway |
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