Oregon House approves bill to boost semiconductor industry with funding and new powers for the governor. Tax breaks for companies under consideration.

Production and cleanroom facilities at work in Intel’s D1D/D1X plant in Hillsboro, Oregon

Oregon lawmakers approved Senate Bill 4, aimed at attracting semiconductor manufacturers to the state. The bill includes $210 million in grants and loans for companies to develop land and conduct research, and grants Governor Tina Kotek the power to shift urban growth boundaries in order to attract more industrial land for development. The bipartisan-supported bill is designed to leverage $200 million in state spending into much more federal funding to boost domestic semiconductor manufacturing.

Criticism of SB 4 has centered on the land-use provision, which has generated concerns from farmers, conservation groups, and Republican lawmakers over granting Kotek too much power that could result in the loss of valuable farmland. Protected farmlands surrounding Hillsboro, the epicenter of the state’s semiconductor industry, have been a particular point of discussion.

During a debate on Thursday, state Rep. Ed Diehl, R-Scio, voiced his concern, stating that he could not give the governor super-siting authority to take lands and bring them into the urban growth boundary, saying that it was not the Oregon way.

Others have taken issue with the decision to commit over $200 million of Oregon’s limited budget at a time when lawmakers do not precisely know how much they will have to spend in the two-year budget that begins in July. The estimates on those figures will not emerge until May.

Despite these criticisms, members of both parties have shown support for SB 4, highlighting the bill as a once-in-a-generation chance to boost the state’s economy for decades to come. Oregon has been a key player in the country’s semiconductor industry since the 1970s, representing almost 15% of the national semiconductor workforce today. Intel has a significant campus in Hillsboro that employs many in the industry.

However, the state has lost out to other states recently in the competition to attract major new facilities, with Ohio, Texas, Arizona, and New York having success in winning those projects. All are expected to compete fiercely for federal CHIPS Act money. To bolster the state's position, members of Oregon’s congressional delegation invited U.S. Commerce Secretary Gina Raimondo to Oregon on Wednesday to argue that Oregon should be a significant recipient of federal funds.

With SB 4 passed, lawmakers are now focusing on tax subsidies that might further entice semiconductor activity in Oregon. A research-and-development tax credit is one significant area of focus. Lawmakers on a Joint Semiconductor Committee previewed an initial proposal for such a credit on Wednesday evening. State Sen. Mark Meek, D-Oregon City, and Rep. Nancy Nathanson, D-Eugene, sketched out a plan that would grant companies up to $10 million in tax breaks for new research and development spending within the state. Nathanson and Meek emphasized that the proposal was more generous than similar credits offered by other states competing for semiconductor investment.