Micron to bring microchip plant to NY

Biden: $280 billion CHIPS Act is working

NEW YORK – Micron, one of the world’s largest microchip manufacturers, announced Tuesday it would open a semiconductor plant in upstate New York, promising an investment of up to $100 billion over two decades and a plant that could bring 50,000 jobs to the state.

The company was lured to the Syracuse area with help from a generous set of federal, state and local incentives, including up to $5.5 billion in state tax credits over 20 years.

The announcement comes after Senate

Majority Leader Chuck Schumer, of New York, had pushed Micron and the company’s CEO, Sanjay Mehrota, to consider upstate New York for its factory. It also comes months after Congress passed the $280 billion CHIPS and Science Act, which set aside $52 billion to bolster the semiconductor industry.

“An investment of this scale in the U.S. is simply not possible without significant government and community support,” Mehrota said at the announcement.

In addition to tax credits, New York has pledged $200 million for road and infrastructure improvements where the plant is being built in suburban Clay and $100 million to a “community benefit” fund. The state also will review supplying the operation with low-cost power.

Micron manufactures the diminutive chips that power everything from smartphones to computers to automobiles. The bill was aimed at bolstering U.S. competitiveness against China and avoiding another chip shortage like the one that derailed the auto and tech industries during the pandemic.

“Chips are essential to our economy, and if we were to lose the ability to manufacture chips here in the United States, it would be a severe, both economic security and national security risk,” Schumer said in an interview with The Associated Press. “This will be the most advanced memory chip manufacturing facility in the United States and probably the world. And, and it’s located in a place that will really benefit from it.”

The company plans to invest $100 billion over the next 20 years, with the first investment of $20 billion planned by the end of the decade, Schumer said. The deal is also expected to bring more than 9,000 jobs to Micron and officials believe it could also bring close to 40,000 other ancillary jobs to the region, from suppliers to contractors, Schumer said.

After signing the $280 billion bill last month, President Joe Biden touted the New York investment as proof that it was working.

“Today is another win for America, and another massive new investment in America spurred by my economic plan,” Biden said. “Micron, an American com

ing about who they need to lay off,” said Layla O’kane, a senior economist at labor analytics firms Lightcast.

There were 10.1 million advertised jobs on the last day of August, the government said Tuesday, down a huge 10% from 11.2 million openings in July. In March, job openings hit a record of nearly 11.9 million.

The report pushed major U.S. markets higher because it is a potential sign that the Fed could slow its rapid pace of rate hikes, though most economists said that it would take more than one report to change the Fed’s trajectory. The U.S. releases critical data on monthly employment on Friday.

The Dow Jones Industrial Average added to its early gains and jumped nearly 770 points, or 2.5%, in midmorning trading.

The report on job openings followed news that Australia’s central bank made an interest rate hike that was smaller than its previous increases, a rare sign of moderation as central bankers around the world rapidly boost rates to fight rising prices.

In its effort to combat the worst inflation in 40 years, the Fed has rapidly raised its key short-term interest rate to a range of 3% to 3.25%, up sharply from nearly zero as recently as March.

Federal Reserve officials are hoping to reduce the demand for workers by raising rates, which pushes up the cost of mortgages, auto loans and borrowing for businesses. While workers typically welcome larger raises, the Fed sees the current pace of wage increases – at about 6.5% a year, according to some measures – as unsustainably high and a key driver of inflation.

Chair Jerome Powell and other Fed officials hope that their interest rate hikes – the fastest in roughly four decades – will cause employers to slow their efforts to hire more people. Fewer job openings should reduce the pressure on companies to raise pay to attract and keep workers. Smaller pay raises, if sustained, could ease inflationary pressures.

“This helps bring that inflation pressure down and reassures the Fed that maybe there is a road out of this without dramatically pushing up the unemployment rate,” said Derek Tang, an economist at Lhmeyer, an economic research firm.

Powell has warned that the central bank’s rate hikes will likely lead to higher unemployment and potentially a recession. Still, he and other Fed officials have held out hope for what they call a “soft landing” – in which the economy slows enough to curb inflation but not so much as to cause a recession.

Christopher Waller, a member of the central bank’s Board of Governors, has argued that the Fed’s rate hikes may be able to reduce job openings and therefore inflation pressures without causing widespread job losses. But former Treasury Secretary Larry Summers and former IMF chief economist Olivier Blanchard have written that such an outcome is unlikely, based on past trends. When job openings fall, layoffs and unemployment typically rise, they found.

Yet for now, businesses are still hiring. Tuesday’s figures arrive the same week that a key report on jobs and the unemployment rate is set to be released Friday. Economists forecast that it will show that employers added 250,000 jobs in September and that the unemployment rate remained 3.7% for a second straight month.

The level of job openings and the number of quits have declined in recent months, which points to some cooling in the job market. Most people quit for another, typically higher-paying job. About 4.2 million people quit their jobs in August, still historically high, but down from a record peak of 4.5 million last November.

Last week, San Francisco Fed President Mary Daly said the declines in job openings and quits were “early signs that the labor market is easing.” But she added that the Fed would still need to see concrete evidence that inflation is falling before it dialed back its interest rate hikes.