KEY POINTS
  • Micron will spend up to $100 billion over at least the next two decades building a new computer chip factory in upstate New York, the state said on Tuesday.
  • The announcement comes after the passage of the CHIPS and Science Act of 2022, a federal law that allocates $52 billion to encourage more domestic semiconductor production.
  • The risks in the U.S.' reliance on foreign computer chip production became clear during the pandemic, as supply chain issues impacted a wide range of goods.

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Micron will spend up to $100 billion over at least the next two decades building a new computer chip factory in upstate New York, the state said on Tuesday.

The announcement, first reported by The New York Times, comes after the passage of the CHIPS and Science Act of 2022, a federal law championed by Senate Majority Leader Chuck Schumer, D-N.Y., that allocates $52 billion to encourage more domestic semiconductor production. Micron CEO Sanjay Mehrotra credited the passage of the law for making the investment possible, according to the Times.

Shares of Micron rose 4.3% Tuesday.

The risks in the U.S.' reliance on foreign computer chip production became clear during the pandemic, as supply chain issues impacted a wide range of goods. Semiconductors are used in a variety of internet-connected devices, from cell phones to cars to medical devices.

When the CHIPS Act became law, it spurred a wave of investment announcements by semiconductor companies, including Micron, which at the time pledged $40 billion through 2030 for U.S. chip manufacturing, saying it would create up to 40,000 domestic jobs. Qualcomm also committed to buying an additional $4.2 billion worth of chips from GlobalFoundries' plant in New York. Intel had said its plans to invest up to $100 billion in chip manufacturing in Ohio relied heavily on the federal legislation.

The choice to put the factory in New York is a win for Schumer, who has led the chips investment push and advocated for his state to host new facilities.

In a phone interview with CNBC, Schumer called the investment "transformative for upstate New York but also for America, because we're going to regain the lead in manufacturing probably the most important commodity or product for the 21st century."

He said he "had upstate New York in mind" three years ago when designing the first iteration of what became the CHIPS and Science Act, when he said this sort of project "was a dream of mine."

Schumer said the region has four key ingredients that make it an attractive spot for U.S. semiconductor manufacturers: access to plenty of water, power, space and the majority leader of the U.S. Senate.

Schumer said he was persistent in his lobbying for the region, estimating he must have called Micron's CEO 50 times throughout the process of finalizing the bill.

"I said, now don't forget upstate New York," he recalled.

The Majority Leader is not done advocating for chip manufacturing in the area, pointing to GlobalFoundries' further investment plans in the region and the presence of manufacturer Wolfspeed.

"We'd like to become the chip fab center of manufacturing in the country," Schumer said.

New York's Democratic governor, Kathy Hochul, also played a role, working to persuade Micron to bring its plant to Clay, a town near Syracuse, the Times reported. The performance-based incentive package from the state is valued at $5.5 billion and is tied to Micron's commitment to create 9,000 new jobs as well as following through on the $100 billion investment. Micron must also meet certain sustainability standards to get the tax credits.

According to a press release from Hochul's office, an economic impact study by Regional Economic Models found the project will create an average of nearly 50,000 jobs in New York state per year over the first 31 years of its operation. It also estimated it would generate an additional $16.7 billion in real, inflation-adjusted, economic output for the state.

At an event touting the investment Tuesday, Hochul also made a pitch for her state to other companies seeking to create jobs.

"As New York's first woman Governor, here's my message to all companies out there: New York will always protect basic health rights of women," she said. "We'll always support the LGBTQ community. We'll always celebrate diversity, the rights of diverse populations. And more than other, any other state, I will say we cherish the rights of all, and we'll continue to be that beacon of hope in the advancement of progress that has always been in our DNA."

President Biden said in a statement from the White House: "Micron, an American company, is investing $20 billion dollars this decade and up to $100 billion over twenty years in CHIPS manufacturing in upstate New York, creating tens of thousands of good paying jobs. Together, we are building an economy from the bottom up and the middle out, where we lower costs for our families and make it right here in America."

If not for the passage of the CHIPS and Science Act, semiconductor manufacturers would have taken their plants overseas, according to Schumer.

"We saw something that could have been an emergency. And we dealt with it in a very good bipartisan way," he said.

"The world can't run without chips," he added. "And if we let a foreign power be in charge of manufacturing, they could sink our economy any time they want."

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