By passing SB 4, the Legislature has taken an important step to position Oregon for semiconductor investment supported by CHIPS Act funding. Oregon’s employers are grateful. The work of lawmakers is not finished, however. Oregon will not be truly competitive for semiconductor or other advanced manufacturing investment until the Legislature approves additional tax policy identified by industry leaders and by the Oregon Semiconductor Competitiveness Task Force.
SB 4 provides $210 million in grants, loans and other funding for semiconductor and advanced manufacturing projects. It also gives the governor temporary authority to make land available for semiconductor project development. These provisions address some of the competitive disadvantages identified by the semiconductor task force, but not others.
Oregon, the task force notes, is one of the few states without a research and development tax credit. Unless that changes, the state will continue to underperform as a competitor for manufacturing projects, including semiconductor projects, that provide good jobs and abundant tax revenue.
According to the semiconductor competitiveness task force, every $1 billion in semiconductor capital investment generates $44 million in public revenue and 7,000 construction-related jobs. Every 2,000 permanent chip jobs create $57 million in government revenue annually.
As for manufacturing generally, research conducted for OBI has found that this sector contributed $33 billion to Oregon’s gross domestic product in 2020. The median earnings of full-time manufacturing workers are 17% higher than those of workers in other industries. And a 10% increase in Oregon’s manufacturing output would support 66,000 new jobs and generate $800 million annually in state and local tax revenue.
If passed, the recommendations of the semiconductor task force would amount to one of the most important economic development policy packages the state has ever offered. The Legislature has now passed some of those recommendations, and that’s undeniably a good thing. If lawmakers want to create the conditions for enduring prosperity, however, they’ll need to do more, beginning with a robust R&D tax credit.