Congress’ passage of the $52 billion CHIPS Act last month could lead to additional expansion of the Micron Inc. semiconductor plant in Manassas.
In a CNBC interview in June, Micron CEO Sanjay Mehrota said if the legislation passed the company would be looking for a home for a new plant. And it has an option to buy 18 acres next to its current facility in Manassas, where the company is just wrapping up a $3 billion expansion begun in 2018.
The CHIPS (Creating Helpful Incentives to Produce Semiconductors) Act, aimed at juicing semiconductor manufacturing in the United States was introduced in the Senate in 2020. In 2021, a bipartisan pair of senators – Mark Warner, D-Va., and John Cornyn, R-Texas – visited Micron’s Manassas plant with Secretary of Commerce Gina Raimondo to champion the bill and its potential impacts on semiconductor manufacturing in Virginia and across the country.
Domestic semiconductor shortages have been linked to production slowdowns in countless consumer and industrial goods, from cars to medical devices and smartphones. Those in Congress who backed the bill say the country’s increasing reliance on Chinese-manufactured chips is a threat to national prosperity and security, particularly after COVID caused massive disruptions in semiconductor manufacturing worldwide.
“I first began sounding the alarm about the need to reduce our reliance on other nations and safeguard our national security by bringing semiconductor production back to the U.S. more than two years ago,” Warner said in a statement after the package passed the House of Representatives last week. “Since then, we’ve seen the consequences of semiconductor shortages all the way up the supply chain and down to consumers, who have faced rising costs on a variety of goods both large and small.”
President Joe Biden is expected to sign the legislation into law next week.
Now, with the financial assistance finally secured on the premise that companies will ramp up chip production, local governments in several regions are watching for indications of what Micron – the world’s fourth largest semiconductor manufacturer, according to some estimates – and others will do next.
Micron has two manufacturing hubs, one in Boise, Idaho, where it’s based, and the other in Manassas. The Manassas plant is the only one in the United States where semiconductor memory storage – known as DRAM – is produced.
Micron looking at sites
Micron has reportedly been scouting locations in other states. Media reports have tied Micron to sites in Texas, California, Arizona and North Carolina, saying that its next plant will likely cost close to $40 billion and generate 10,000 new jobs. The CHIPS Act includes $39 billion in incentives for semiconductor plant construction.
In a statement after the bill passed, Micron said the incentives will allow the company to grow domestic production of memory significantly.
“As a result of this bipartisan effort to ensure our economic and national security, Micron has an historic opportunity to invest in bringing the most innovative leading-edge memory manufacturing to the U.S.,” the statement said. “We look forward to sharing more details regarding our plans in the coming weeks.”
Micron’s most recent expansion in Manassas still isn’t complete, but that doesn’t mean the company won’t want even more real estate close to the nation’s capital and one of the fastest growing tech hubs in the country.
Micron announced a $3 billion expansion of its Manassas plant back in 2018, with the help of $70 million from the state. In return for the state money, the company promised that the expansion will add 1,100 jobs to the city by 2023. Manassas officials told InsideNoVa that the city issued a certificate of occupancy for its newest building in December.
In late June, Mehrota went on CNBC’s Closing Bell to discuss the pending legislation. He was asked about reports that Micron was exploring where it would build its next plant.
“We have not confirmed the site yet; we are evaluating multiple states across the U.S., in terms of site selection. First things first, we need to get CHIPS passed and, of course, we will be then making our decision around the site,” Mehrota said. “We have manufacturing here in Manassas, Virginia, as well, and of course, we are looking at future large potential opportunities for manufacturing.”
The publicly traded company reported $27.7 billion in revenue and profit of $10.4 billion in 2021 (up 59% from 2020).
Option to buy land
Last fall, Micron and the Manassas City Council entered into an “option to purchase” agreement for 18.12 acres of city-owned land at the northeast corner of Route 28 and Godwin Drive. According to the agreement, the company has until 2024 to inform the city at any point that it wishes to buy the land – currently the home for the Greater Manassas Baseball League – for $14.1 million.
“At this point, Micron has not told us that they want to exercise that option yet … at any time that they exercise that option, that gives us a two-year window to make sure that we’ve got the ball fields relocated for GMBL,” City Manager Pat Pate told InsideNoVa.
Urging CHIPS Act passage ahead of the Congressional recess in August, Mehrota said the company would be “looking at making our decisions in the next few months.”
“This is really important to secure economic stability and economic prosperity here in the U.S., as well as, of course, national security,” he said.