The city of Longmont recently won designation for a CHIPS Zone, providing tax incentives for companies engaged in semiconductor design and production. Longmont became the second Colorado city after Fort Collins to receive such a designation.
BizWest editor and publisher Chris Wood joined KUNC’s Nikole Robinson Carroll to discuss what this news could mean for northern Colorado.
A CHIPS zone is a geographic area that functions much like an enterprise zone, which provides tax benefits for companies within economically distressed areas.
“A CHIPS zone provides similar benefits to companies that are engaged in research, development and manufacturing of semiconductors,” Wood told KUNC. “Colorado last year passed the CHIPS Refundable Tax Credits Program in response to the federal CHIPS and Science Act, and that federal law provides $280 billion to boost various sciences and manufacturing, including semiconductors.”
Wood said Fort Collins and Longmont have a long history in semiconductor design and research.
“In Fort Collins, you have companies such as Broadcom, Intel and Advanced Micro Devices,” he said. “Longmont has Seagate, AMD, Micron and others.”
Get top headlines and KUNC reporting directly to your mailbox each week when you subscribe to In The NoCo.
Fort Collins won approval last June for a CHIPS zone and a Longmont zone was approved in February by the Colorado Economic Development Commission and the Colorado Office of Economic Development and International Trade.
“Another Colorado city that has a robust semiconductor industry is Colorado Springs, but much of its semiconductor sector resides in an existing enterprise zone,” Wood said. “And you can't overlap an enterprise zone and a CHIPS zone. So we probably won't see a CHIPS zone application there. But there are other areas that could be in the mix; we'll have to see. There are some significant semiconductor operations in Jefferson County, for example. So it is possible that we might see some more applications.”
Semiconductors are used in a variety of products, including cars, cell phones, military hardware and medical devices. The federal government has been placing a lot of emphasis on domestic production of them in recent years. Wood points back to the height of the COVID-19 pandemic.
“I know, most of us want to forget that era. But we did have a lot of supply chain issues that arose out of the pandemic and that really shined a spotlight on how dependent the U.S. has become on foreign production of semiconductors,” he told KUNC.
The Semiconductor Industry Association estimates the U.S. once accounted for 37% of semiconductor manufacturing worldwide. That has now dropped to 12%.
“That reliance on Taiwan, Japan, Korea or China has serious national security implications,” Wood said, “not only because of supply chain issues, but also because of the potential for an adversary to insert so-called ‘backdoors’ into chips that could allow them to be reprogrammed or even shut off in the event of conflict.”
The Semiconductor Industry Association ranks Colorado ninth overall in number of semiconductor facilities statewide.
Wood says semiconductor manufacturers can take advantage of other programs, such as job training tax credits.
“We're already seeing expansions for Broadcom in Fort Collins, and Microchip Technology and Integris in Colorado Springs — those projects alone would account for hundreds of new jobs,” Wood told KUNC. “Micron Technology also has leased more than 200,000 square feet in Longmont to potentially expand its presence in the city. So we're talking about potentially many hundreds of new jobs.”
