Micron wins $6.1 billion CHIPS grant for Central NY and Idaho projects, Schumer says

Washington – The federal government has agreed to provide Micron Technology a $6.1 billion grant to build a massive complex of computer chip plants in Syracuse’s northern suburbs, U.S. Sen. Charles Schumer and a senior Biden administration official told syracuse.com | The Post-Standard.

Some of the federal money would also support a chips plant expansion at Micron’s headquarters in Boise, Idaho, as part of the preliminary, non-binding deal with the U.S. Department of Commerce, Schumer said Wednesday night.

President Joe Biden plans to announce the agreement next week, the senior administration official told syracuse.com.

The deal marks the most important milestone for Micron since it agreed in October 2022 to invest up to $100 billion to build a mega-complex of four chip manufacturing plants in the town of Clay. It would be the largest single private investment in New York history.

“It’s historic news, a once in a generation investment,” Schumer said of the federal grant. “It’s one of the largest single direct federal investments ever in New York history. There should be a smile on everyone’s face in Central New York.”

The grant for Micron would be the fourth largest awarded so far to any company competing for aid from the $52 billion federal CHIPS and Science Act.

The deal with the federal government means Micron can move forward without delay on its ambitious plans, assured that it will receive a massive federal aid package that the company said it would need to build any plant in the United States.

“A few years ago, I promised Micron if they chose Syracuse and Upstate New York I’d make sure to deliver the federal resources they need to ensure that their mammoth vision would become a reality,” Schumer said. “To all of those who have had their doubts, Micron is here and Micron is real.”

Micron applied to the U.S. Department of Commerce in August for the subsidies to support construction of up to four separate fabrication plants, or fabs, at White Pine Commerce Park in the town of Clay.

The $6.1 billion grant to be announced next week would support the first two fabs in Clay that would be built before the end of the decade at a cost of $48 billion, the administration official said.

The CHIPS program was set up with the goal of making 20% of the world’s semiconductors in the United States by 2030.

The tentative agreement includes an undisclosed sum to support a $15 billion chip plant that would be built at Micron’s headquarters in Boise, Idaho, the senior administration official, speaking on the condition of anonymity. The official said the final package of subsidies, to be announced next week, could also include federal loans.

Micron said it would spend up to $100 billion over 20 years to build and equip the four plants in the town of Clay – marking the largest investment in the company’s history.

The plants would directly employ up to 9,000 people and create up to 40,000 supply chain jobs in Central New York, according to Micron and state officials.

Micron President and CEO Sanjay Mehrotra said the deal was contingent on the company receiving billions of dollars in federal subsidies.

Without the federal grants and investment tax credits, Mehrotra said, Micron would not have agreed to expand in New York or even the United States.

The company said labor, production and construction costs are significantly higher in the United States than in Asia, where Micron operates all but two of its 11 factories.

The CHIPS and Science Act pushed through Congress by Schumer, the Senate majority leader, set aside $52 billion worth of incentives to lure chipmakers back to the United States as a national security priority. The incentive fund includes $28 billion for leading-edge chipmakers like Micron.

Federal officials have said they are trying to stretch the grant money as far as possible to meet demand. Manufacturers have applied for $70 billion worth of grants.

It’s the largest commitment the federal government has ever made to boost the semiconductor industry. Most of the world’s advanced, leading-edge chips are made overseas, mainly in Taiwan.

Schumer, D-N.Y., said he developed the CHIPS law with Upstate New York in mind, hoping to boost places like Syracuse that had lost thousands of factory jobs over the past four decades.

So far, the federal government has reached tentative agreements to provide CHIPS grants and loans to six other companies.

Biden announced the largest of those deals March 20. Chip giant Intel Corp. would receive up to $8.5 billion in grants and $11 billion in loans for an expansion in four states.

Intel promised it would invest $100 billion to build new manufacturing plants, and expand or modernize others, in Arizona, Ohio, New Mexico and Oregon.

Earlier this month, the Commerce Department announced preliminary agreements to provide $6.6 billion in grants for Taiwan Semiconductor Manufacturing Company (TSMC) in Arizona and $6.4 billion for Samsung Electronics to build chip plants in Texas.

In February, the CHIPS program agreed to provide GlobalFoundries with $3.1 billion in grants and loans to expand its Upstate New York computer chip plant and modernize a factory in Vermont.

GlobalFoundries would receive $1.5 billion in grants and $1.6 billion in federal loans under the preliminary, non-binding agreement, according to the U.S. Commerce Department.

In return, GlobalFoundries would spend about $12.5 billion to expand capacity. Most of the money would be spent to expand a chip production plant in Malta, Saratoga County.

That agreement included a commitment from GlobalFoundries to continue to provide a $1,000-per-employee annual subsidy for childcare and to extend the benefit to construction workers who build the new plant.

Two other companies signed preliminary agreements for smaller amounts of CHIPS Act money.

In December, the federal government agreed to supply BAE Systems with up to $35 million worth of incentives to modernize its plant in New Hampshire. In January, Microchip Technology Inc. agreed to a deal for about $162 million in subsidies to support expansions of plants in Colorado and Oregon.

None of the chipmakers will receive their grants and loans as upfront payments, Commerce Department officials said. The money will be paid out over time as chipmakers meet milestones related to construction and production timelines.

Micron’s agreement caps more than six months of secret negotiations with the CHIPS Program Office within the Department of Commerce.

A senior administration official said negotiations took place daily with large manufacturers of the most advanced chips, like Micron.

Even now, negotiations are far from complete.

The Commerce Department said it plans to hire third-party consultants to review all of the preliminary agreements and determine if it’s a good deal for taxpayers.

The CHIPS Program Office has declined to identify the experts from outside of government who will be hired to review the deal.

If the team of experts approve, federal officials will begin final negotiations with Micron. There is no deadline for a final agreement to be signed.

The Micron plant in Clay would make DRAM (dynamic random-access memory) chips. Only about 2% of the world’s supply of those chips are made in the United States.

The memory chips are used in items like cell phones, computers, automobiles, and servers used to support artificial intelligence applications.

Micron is among 170 semiconductor companies who submitted applications for grants and loans under the CHIPS Act. An additional 570 companies have filed statements of interest in the incentive program.

In addition to the grants and loans, chip manufacturers will be able to claim a 25% federal investment tax credit for the cost of building and equipping their new plants.

There’s no limit on the total amount of tax credits a company can claim, but the money could run out quickly as new plants are completed. The tax credit program is expected to cost about $24 billion.

Those tax credits would be issued annually as companies finish building and buying equipment for their new plants.

With today’s agreement, Micron now has deals in place to receive a package of more than $12.4 billion in local, state and federal government incentives for its expansion in Central New York.

An incentive package worth at least $6.3 billion from New York state and Onondaga County ranks as the second richest subsidy package provided to a company since 1980 by local governments, according to Good Jobs First, a Washington, D.C. watchdog group.

The group maintains a database that tracks government subsidies to businesses. The only larger incentive package was the $8.7 billion provided in 2013 to aircraft maker Boeing in Washington state.

To help lure Micron, New York state agreed to make the company eligible for up to $5.5 billion in jobs tax credits from its Green Chips program.

Micron will be able to claim tax credits of up to $500 million per year for up to 20 years for each plant they build in the state.

Gov. Kathy Hochul late Wednesday praised the completion of what she called a “transformative deal” between Micron and the state and federal government.

“We’re going to revitalize our Upstate economy -- one microchip at a time,” Hochul said.

The state has also agreed to spend $200 million on road and infrastructure improvements at White Pine Commerce Park. Separately, the state agreed to contribute $100 million toward a $500 million “community fund” for Central New York.

Onondaga County would provide $275 million worth of incentives. Most of that money — $200 million — would be spent on upgrades of a sewage treatment plant to handle additional flows from Micron’s factories.