Decades after fumbling away what once looked like a dominating hold on the 1980s computer revolution, Texas has launched a comeback that threatens to loosen China’s economic grip on America and make the Lone Star State a true tech industry hub rivaling Silicon Valley.
Already some of the biggest computer microchip makers and designers like Intel, AMD and Samsung are expanding their footprints in the state, and now the federal government is considering making Texas a $2 billion national research hub for the industry, which has been firmly rooted in East Asia.
The prospect is so enticing that it has Longhorns working with Aggies, Democrats with Republicans and even Gov. Greg Abbott is ready to work with President Joe Biden’s administration.
BACKGROUND: Biden urges action on semiconductor bill, as Texas looks to ramp industry
“We’re in a digital race with our adversaries,” U.S. Rep. Michael McCaul said after a meeting last week in Austin with top semiconductor industry leaders and U.S. Commerce Department officials. “We’re on the cusp of something really big.”
Semiconductor chips are in everything from cars to computers, to smartphones and appliances. During COVID-19, McCaul said it became abundantly clear that having almost all of the semiconductor chip manufacturing overseas was disastrous for supply chains and a national security problem, given that chips are vital for the military.
That’s why he and U.S. Sen. John Cornyn led a bruising effort in Congress last year to pass legislation, called the CHIPS Act, that creates billions of dollars in incentives for semiconductor companies to move to Texas. More than $60 billion is now targeted to come to Texas to grow the industry. And tucked into the legislation is another $2 billion proposal to create a National Semiconductor Technology Center. While Texas is in competition with other states for that site, McCaul said the University of Texas and Texas A&M University are combining forces to land the contract.
“I want it here,” said McCaul, whose congressional district stretches from Austin to Katy.
And the federal government knows. On Monday, J.D. Grom, a top official with the U.S. Department of Commerce, talked with the Republican congressman and others about what they are looking for in applications for the center and other funding tied back to the Cornyn and McCaul legislation.
The mission of it all, Grom said, is to reduce the time and cost of developing new technology in the semiconductor industry.
“By the end of this decade we are hopeful that America will not only design but produce the world’s most advanced chips on our shores,” Grom said.
Getting universities on the same page
Already more than 75 percent of chip design work is done in Texas. Where the U.S. has lagged is in the actual manufacturing of chips. But that is beginning to change.
Texas Instruments has kicked off construction on $30 billion manufacturing operations in Sherman, in North Texas, that will bring an estimated 3,000 jobs.
Samsung is building a $17 billion advanced chipmaking plant in Taylor just north of Austin as part of an expected $200 billion expansion, with 11 new facilities.
And in December, Taiwan-based GlobalWafers Co. said it was starting construction of a 12-inch silicon wafer plant in Sherman
In a lot of ways, Texas is picking up where it left off in the 1980s. Texas was a budding technology hub back then, home to Tandy Corporation in Fort Worth and Microelectronics. Computer Technology Corporation moved to Austin and Texas Instruments in Dallas was creating advanced chips that no one else in the world was making. TI in the early 1980s was the largest maker of semiconductors in the world.
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At one point, then-San Antonio Mayor Henry Cisneros predicted I-35 was on its way to being one of America’s great technology corridors.
It didn’t last. While chip designers are still in Texas, most of the manufacturing went overseas, primarily to China and Taiwan where almost all chips are now made.
McCaul said the national security problem is already obvious because of the relationship with China. But when the pandemic hit it only further showed the vulnerability of the U.S. supply chain for semiconductors as everything from cars to appliances were suddenly hard to come by. He and Cornyn began meeting with President Joe Biden within the first days of his administration taking office and planted the seeds for the CHIPS bill that could provide a pipeline of federal investments for Texas.
Since then, McCaul and others have been trying to break down barriers and rivalries that could hurt Texas in winning the national center. In that regard, the University of Texas at Austin and Texas A&M University, which graduates more engineers than any school in Texas, have formed a partnership and promised to work with each other to land the project.
UT president Jay Hartzell said they already have a 66,000-square-foot research facility built during the 1980s tech boom that needs to be upgraded but should put UT in a good position to play a big role in the state’s overall efforts.
Hartzell said it is not enough that UT and A&M are working on the project. He said it has to be a statewide push from colleges and universities particularly because of the workforce demands. The semiconductor industry needs everything from manufacturing workers to doctorate students in engineering.
“The problem’s too big for any one university to tackle,” Hartzell said. “As big as we both are, we can’t do it all alone.”
Texas A&M System Chancellor John Sharp said the partnership will be crucial if the state is really going to to become the forefront of a global industry.
Creating a talent pipeline
A key component of the CHIPS package is more than $200 million of incentives for workforce development to make sure schools are producing people who can work either in manufacturing or engineering.
Allen Thompson, vice president of U.S. government relations for Intel, said the challenge for Texas is going to be making sure there’s a consistent pipeline of future engineers to meet the needs of the fast-growing industry.
“Pay close attention to how you are going to maintain the engineering workforce,” Thompson said.
Political battles have also been pushed to the back burner as McCaul and U.S. Rep. Lloyd Doggett, D-Austin, have praised one another for their efforts on the legislation. McCaul even declared that the CHIPS bill wouldn’t have succeeded without the Biden administration and Commerce Secretary Gina Raimondo helping them navigate Congress.
Although Biden and Abbott have clashed plenty since Biden was elected, Abbott said on Wednesday that he doesn’t think that will get in the way of Texas winning federal commitments from the White House or Commerce Department, which is implementing the CHIPS legislation. Ultimately, he said, it’s a national security issue for the United States, and Texas is in a position to execute quickly on any plans or projects.
“There is a need for speed,” Abbott said. “No state can match the speed that Texas provides to ensure that we will be up and running the manufacture chips that will propel the next generation of technology.”
McCaul said the stakes are just too high for political rivalries or egos to get in the way. He called it a generational transformation of an industry that Texas finds itself well positioned to lead if everyone can just get on the same page.
“It’s really the future of the world,” McCaul said.
jeremy.wallace@houstonchronicle.com
