Inside Colorado’s Semiconductor Success Story
Although the semiconductor chip may be tiny, production of this critical technology relies on a vast ecosystem to meet everincreasing demand. With chip-hungry companies such as Google and Lockheed Martin expanding their foothold in the state, Colorado has become a microcosm of the type of interconnected network required to develop the ubiquitous semiconductors that make modern society run.
The state has two major fabrication plants and an array of design centers run by industry powerhouses, including Intel, AMD and NVIDIA. Clustered around the tech hubs of Fort Collins, Colorado Springs, Boulder and Longmont, these facilities are supported by advanced equipment and materials suppliers and leading universities focused on research and development (R&D). Based on Semiconductor Industry Association data, their presence puts Colorado among the top 10 states in terms of the number of semiconductor facilities and 5th in the concentration of design and R&D activities.
Colorado’s semiconductor expansion is just getting underway, thanks to federal and state incentives. The 2022 CHIPS Act provided the initial boost, unlocking $39 billion in incentives to boost domestic production amid a pandemic-induced chip shortage.
Capitalizing on the federal initiative, Colorado governor Jared Polis worked with lawmakers on programs to attract semiconductor-related projects. The governor tapped the Global Business Development division of the Colorado Office of Economic Development and International Trade, which hired Dan Salvetti to become semiconductor industry manager to launch, develop and oversee the programs.
Describing the CHIPS Act as a “once-in-a-generation opportunity,” Salvetti said the state’s semiconductor ecosystem is primed to take the next step. “We have the full breadth of the value chain here, as well as related industries, a top-tier R&D and learning ecosystem with universities and federally funded labs and a government that is committed to supporting the industry’s growth.”
Salvetti worked closely with industry leaders and local stakeholders to design a strategy that enables companies to leverage state and federal dollars more effectively. They came up with two incentives to remove some of the risk of private development: a five-year program offering refundable tax credits totaling $75 million and a CHIPS Zone designation to make tax credits available in localities considered ripe for semiconductor development.
Salvetti’s team has moved quickly to deploy the new tools.
In December, Microchip became the first company to tap the refundable tax credits, gaining access to up to $10 million in performance-based credits. The state support helped the semiconductor producer become the first Colorado beneficiary of federal CHIPS Act funding in January in a $90 million preliminary deal. The money will help Microchip more than triple the semiconductor output at its Colorado Springs facility and create 400 jobs.
The state has also established CHIPS Zones in Fort Collins and Longmont, with a third area expected in the coming months. The established zones include facilities and operations from Intel, NVIDIA, Broadcomm, Micron, AMD and Western Digital, among others.
The CHIPS Act has the potential to bring the state up to $1.2 billion in federal funding, which could generate as much as $7.8 billion in private investment and nearly 1,300 jobs, according to estimates that Salvetti bases on Colorado’s current share of national semiconductor production. Between the Microchip news, Entegris’ announced $725 million, 600-job expansion and the decision to base the CHIPS Metrology R&D Program at the NIST Boulder Lab–which will develop techniques and standards for measuring microelectronics that will allow us ever smaller, more powerful chips–the state is well on its way.
That outlook could prove conservative, given the state’s growing number of semiconductor-dependent advanced industries, said Salvetti, noting Colorado’s recent designations as a quantum tech hub under the Economic Development Administration’s Regional Technology and Innovation Hub program and a climate resilience engine under the National Science Foundation’s Regional Innovation Engine program.