Central New York is reportedly getting closer to attracting a semiconductor factory to the White Pine Commerce Park in Clay, bringing 3,000 to 5,000 jobs. It’s close enough that planners are thinking about how they might head off the kind of backlash that sunk Amazon’s plan to locate a second headquarters in New York City.
You’ll recall how activists (and some editorial boards) recoiled at the nearly $3 billion in subsidies New York state offered Amazon to attract one of its two East Coast headquarters, and 25,000 tech jobs, to Long Island City in Queens. They questioned why New York would throw so much taxpayer money at a trillion-dollar online retailer led by the world’s richest man. Residents worried they would be priced out by an influx of highly paid tech workers. Lawmakers were blindsided by the incentive deal hashed out in secret by the Cuomo administration. As opposition stiffened, Amazon quit New York and focused on its HQ2 in suburban Washington, D.C., instead.
There are lessons to be learned from New York’s Amazon debacle. But a computer chip factory is not another Amazon. The stakes are immeasurably higher.
First, the nation’s economic competitiveness depends on creating more semiconductor manufacturing capacity in the United States.
Right now, only 12% of chips are made here. Taiwan and South Korea dominate the market. The Covid-19 pandemic exposed the risks of depending on other countries for these critical components. Disruptions in the supply chain shut down automakers in the U.S. for weeks, throwing tens of thousands of Americans out of work, emptying dealer lots and causing the price of used cars to skyrocket. U.S. consumers who hope to give smartphones, tablets, toys, video game consoles and other gadgets as gifts this holiday season will find prices higher – if they can find the goods at all. In the long run, the future belongs to the country that wins the race to develop the most advanced chips. That should be us, not China.
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Second, U.S. national security depends on making our own chips.
International tensions and trade disputes also can disrupt the chip supply. The United States needs to develop trusted, secure, hack-proof sources of computer chips for critical applications like communications, power grids, cybersecurity and national defense.
Third, a high-tech semiconductor manufacturing corridor from Albany to Syracuse has the potential to energize the Upstate New York economy.
Saratoga County’s fortunes have risen since the construction of a GlobalFoundries chip fab a decade ago; a second fab is planned. Cree is building a fab in Marcy. Those plants received hefty subsidies from New York state, along with investments in SUNY Polytechnic and community colleges to develop and train workers. A Syracuse fab could capitalize on the state’s previous investments. As in Silicon Valley, proximity to other tech companies breeds innovation and exchanges of ideas and people.
Because of its importance to the nation, the federal government should pick up most of the cost of “re-shoring” semiconductor production. The Senate already passed a bill that includes $52 billion in funding for this purpose. The House should pass the bill and President Joe Biden should sign it.
New York state also is prepared to kick in. Gov. Kathy Hochul is said to have signed off on an incentive package that will require approval from the New York state Legislature. Assembly Speaker Carl Heastie is in the loop.
This is in addition to the millions Onondaga County poured into acquiring the land and building infrastructure at White Pine since the 1990s.
To avoid a repeat of the Amazon backlash, officials are feeling the pressure to show how the subsidies showered on corporations and developers don’t just fill their pockets — they benefit a whole community in concrete, measurable ways.
But they should have no trouble making the argument that semiconductor manufacturing is worth the investment because it is in the national interest — and will pay off in ways Amazon never could.
This editorial was first published in Advance Media New York newspapers on Oct. 3.