The Oregon Semiconductor Competitiveness Task Force issued its highly anticipated findings Aug. 17, and they can be summed up as follows: Oregon would be poised to capitalize on a coming surge of semiconductor investment were the state not hampered by inadequate tax incentives, an unhelpful regulatory environment and an aging land-use system that constrains industrial growth. By confronting these obstacles, Oregon’s elected leaders could attract billions of dollars in construction and development, leading to the creation of lucrative jobs for Oregonians from all walks of life.
The task force’s findings matter to employers involved directly or indirectly in the semiconductor industry, of course. But they matter just as much to manufacturers of other products, from food to steel. They, too, need land, sensible tax policy and regulatory clarity to succeed and grow.
Working in Oregon’s favor, the task force notes, is its long history as a leader in semiconductor research and development, thanks to the presence of Intel in Washington County. As Intel has grown, so has the ecosystem of suppliers and related businesses that make up the state’s Silicon Forest. Oregon is such a leader in this area – semiconductors represent nearly half of all Oregon exports – that many were stunned by Intel’s January announcement that it would build at least two semiconductor plants in Ohio.
That shock led to the creation of the Semiconductor Task Force, led by U.S. Sens. Ron Wyden and Jeff Merkley, Gov. Kate Brown, U.S. Rep. Suzanne Bonamici and Portland General Electric CEO Maria Pope. What, the task force has asked, must Oregon do to maintain its status as an R&D leader while attracting billions of dollars in new development supported by the recent passage of the CHIPS Act?
The answers include:
Taxes and incentives: It is “meaningfully more expensive” to build and operate semiconductor factories in Oregon than in competitor states, the report notes, and adjusting taxes and incentives could close this gap. The state should consider forgivable loans, workforce-training incentives and various other measures, including a research and development tax credit, the absence of which the task for calls a “glaring omission.”
Land use: The semiconductor industry is prone to clustering, and therefore likely to consider growing in the Portland metro area. However, the region lacks developable land on the scale the industry needs. This calls for both short-term measures to make a handful of suitable sites available as well as a long-term review of the state’s land use system, which chronically limits the supply of industrial land.
Environmental regulation: Recent rulemaking activity has eroded predictability and increased uncertainty in regulatory compliance and permit review, “significantly lengthening permit review times.” This environment is unappealing to employers rushing to invest, eroding Oregon’s competitiveness. Solutions include, among other things, the setting of clear timelines, milestones and requirements; sensibly metered rulemaking; and the establishment of points of contact to help businesses navigate regulatory processes.
Talent and workforce: Several semiconductor firms identified talent availability as a top factor in deciding where to invest, yet Oregon suffers from workforce shortages in key areas, including technicians and operators. The task force recommends the development of more effective strategic relationships among industry, education, community organizations and government.
Underscoring the urgency of addressing these obstacles, the task force report notes that three major semiconductor companies are considering investments in Oregon ranging in value from $6 billion to $8 billion. The new employment impact would exceed 10,000 and generate more than $500 million in state and local tax revenue over a five-year period.
Consider, too, the effect such reforms would have on the many other manufacturers that would locate, grow and remain in Oregon if conditions allowed them to.
A link to the report can be found here.