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Bill Puts $1.4B into Semiconductor Research and Manufacture

Two universities will lead the effort to build and maintain a robust semiconductor manufacturing economy.

Microchips are increasingly present in everyday life, from phones and laptops to cars and washing machines. Gov. Greg Abbott approved last week a stimulus package in an effort to shore up the supply chain after the pandemic’s disruptions.

Texas is pumping $1.4 billion into microchip research and manufacturing initiatives in an effort to attract new investments, secure lucrative federal grants and create thousands of high-paying jobs over the next decade.

This month the governor approved the Texas CHIPS Act, which will create the Texas Semiconductor Innovation Fund, a pot of money to subsidize companies that manufacture semiconductors in Texas and provide matching funds to universities and other state entities investing in chip design or manufacturing projects.

Lawmakers this year appropriated $698.3 million for the new fund and an additional $666.4 million for the creation of advanced research and development centers at the University of Texas at Austin (UT-Austin) and Texas A&M University (TAMU).

Microchip companies currently operate 54 facilities in the state. With about 45,000 workers, Texas has the second-largest workforce in the industry, behind only California, according to the Semiconductor Industry Association. The state is aiming to reach the top position by 2030.

Texas public coffers will fund two research and manufacturing centers at the state’s flagship universities, with two goals: Put Texas at the forefront of advancing technologies and develop the necessary workforce for the industry. Finding highly skilled workers is one of the biggest challenges to bringing chip manufacturing back to the U.S.

UT-Austin will receive $440 million to build fabs, which will be part of the Texas Institute for Electronics (TIE), a public-private partnership launched in 2022 that plans to become a nonprofit, independent organization this year. TIE focuses on the manufacture of the shells that contain microchips, a process known as packaging.

Packaging used to be considered a low-value part of the supply chain, but that is changing, according to S.V. Sreenivasan, director of TIE.

In recent decades, chips have become smaller and increased in capacity at an accelerated rate, but the pace of improvement is slowing down, Sreenivasan said. TIE aims to develop advanced packaging systems, which includes putting different types of technologies on the same chip. U.S. companies dominate the microchip design stages but manufacture only 12 percent of the circuits and make 3 percent of the packaging, Sreenivasan noted. That puts the country in a vulnerable position if the transnational supply chain is disrupted, he said.

TAMU will receive $200 million to build fabs for quantum and artificial intelligence chip fabrication and about $26.4 million for the Center for Microdevices and Systems, which will work to develop the next generation of chips, according to Yossef Elabd, vice chancellor for research there.

“We are focused on the new chemistry, the new materials, the new processes and the next version of the chip,” Elabd said.

The facilities at both universities do not aim to manufacture chips for commercialization; instead, they will focus on piloting new products that meet market standards and training the future technicians, engineers and leaders of the industry. Semiconductor companies are giving feedback to UT and TAMU about what kind of facilities they need to build and what they should teach students to be prepared for working in this business.

This story originally ran in The Texas Tribune.