In downtown Sherman, markers explain the city’s past, and restaurants and coffee shops boast about the historic buildings they call home.
Ten minutes down the road, Dallas-based Texas Instruments and Taiwanese-owned silicon wafer builder GlobalWafers plan to spend a combined $35 billion on high-tech factories in the semiconductor supply chain.
Sherman, the bigger part of the 120,000-person Sherman-Denison metro area, is no stranger to change. Its transformation into a key U.S. hub for semiconductor manufacturing is made possible by natural resources, infrastructure and savvy local leadership and a business-friendly tradition dating back decades.
“It’s in our DNA,” said Kent Sharp, president of the Sherman Economic Development Corp., which helped land the GlobalWafers deal that’ll bring the first facility of its kind to the U.S. in two decades.
Semiconductors, the tiny chips that power modern computers and other electronic devices, are at the heart of city leaders’ plans. The city wants to be home to companies along all steps of the supply chain, from crafting silicon wafers to creating circuit boards for consumer products.
In 1990 the U.S. accounted for 37 percent of semiconductor production capacity. In 2020 that number dropped to 12 percent, according to a study by Boston Consulting Group and the Semiconductor Industry Association.
During the coronavirus pandemic, supply chain issues in securing chips from overseas and record demand caused a persistent shortage, prompting calls to bring more production to the U.S. The shortage has been exacerbated by continued lockdowns in China and ripple effects from the war in Ukraine. Semiconductor supply chains are still vulnerable, and long-term demand is skyrocketing thanks to increasing digitization.
For Taiwan-based GlobalWafers and its GlobiTech subsidiary, supply chain issues mean high demand and an impetus to add capacity through a $5 billion expansion in Sherman.
“We and our peer competitors have been sold out, especially on advanced products (300 millimeter) where the supply will remain tight possibly through year 2024, which is the timing of new expansions,” GlobiTech President Mark England, a Sherman native, said via email.
Before semiconductors roll off the line into cars, consumer electronics and industrial machinery, fabrication plants start with a silicon wafer — a large, mirror-like sheet of ultra thin silicon that yields thousands of chips. The new GlobalWafers plant will craft those wafers, in addition to being capable of applying a crystalline coating. GlobiTech’s existing facilities will receive some of the raw wafers and apply that coating.
GlobalWafers’ expansion will be a long-term investment. Samples will begin making their way to customers in the second half of 2024, and mass production — starting at 350,000 wafers a month — will begin in 2025.
GlobiTech and city leaders weren’t certain Sherman would win the project, especially since construction costs in the U.S. are three times more expensive than overseas. Sites in Ohio and South Korea were being considered, and all three locations offered big economic incentives.
The business deal came from collaboration between the Sherman Economic Development Corp., four local taxing bodies and state government — as well as a promise of future federal incentives. The economic development agency was “the point of the spear,” City Manager Robby Hefton said, organizing different groups during negotiations with companies like GlobiTech.
The economic development agency offered $20 million in cash and the sale of over $14.4 million in land for $1 an acre. The Texas Enterprise Fund contributed a $15 million grant. The city, Grayson County and Grayson College chipped in tax incentives, and the city offered a discount on water bills. Though it needs school board approval, the company should also receive a break on taxes paid to the local school district.
The company has been working with Sherman for 20 years, England said, and the city has several advantages. GlobiTech’s existing management team can oversee the new plant, which is helpful because the wafer production process involves trade secrets. The city has an ample supply of workers, land, power and other utilities, boasting some of the best water access in Texas thanks to Lake Texoma, one of the few reservoirs in the state that’s at full capacity.
The GlobalWafers project will be eligible for incentives under the CHIPS Act approved in January 2021, but Congress still needs to provide $52 billion in funding for subsidies to spur domestic semiconductor investment, which is essential. Deal makers are anxious to see the bill funded before Congress recesses in August, and city leaders have talked to elected officials about its importance.
After wafers come off the assembly line, companies use them as the base for microchips. In the U.S., that’s where companies like Texas Instruments come in.
Last year Sherman won the $30 billion TI expansion that will be the crown jewel of the city’s manufacturing sector and secure its place in the middle of the semiconductor supply chain.
GlobiTech began operations in 2001. Apple II-VI’s factory opened in 2018, producing parts for the iPhone.
“We envision the complete semiconductor ecosystem developing with chip manufacturers, and starting materials,” England said in an email. “It should completely change the landscape of Sherman.”
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