Topeka, KS — Kansas has struck a deal with a Wichita company to build a $1.8 billion semiconductor manufacturing plant, but it hinges on the company securing federal money by later this year.
Democratic Gov. Laura Kelly announced on Thursday a deal with Integra Technologies to build the plant in the Wichita area and create 2,000 new jobs. Shortly before the reveal, a panel of lawmakers and the governor approved a $300 million tax incentive package that was crafted behind closed doors.
“Integra’s investment will have ripple effects throughout Wichita and the entire state,” Kelly said. “ But more importantly, this investment will add more proof that we have put all of Kansas on the map.”
Semiconductors are chips used in many different forms of technology, ranging from smartphones to the computers used in vehicles. The U.S. is investing heavily in manufacturing them because a limping supply chain during the pandemic led to shortages. Integra manufactures the chips for space applications like the Mars Rover and more than 100 U.S. Department of Defense projects.
The agreement says Integra must secure federal funding by October 1 of this year, or the state can withdraw the offer and pursue other companies.
Brett Robinson, Integra President and CEO, said the company is confident it will secure the federal funding because of its standing in the industry.
“Our 40 years of history,” Robinson said, “and proven customer track record makes us very competitive for (the federal funding).”
The new megaproject is the second in less than a year to use a new Kansas economic development law known as APEX that hands out hundreds of millions of dollars in incentives to bring new business to the state.
The same law was used to land a $4 billion Panasonic electric vehicle battery plant in De Soto that promises to bring 4,000 jobs to the state. The company could earn up to $830 million of tax, payroll and staff training incentives for building the plant and hiring employees.
Republican Senate President Ty Masterson said the investment in semiconductors is important for U.S. security and the national supply chain.
“We’re excited to have a Wichita company,” Masterson said, “somebody that is here already and expanding and committed to Kansas.”
Luring Panasonic to Kansas over Oklahoma was considered one of the few bipartisan victories in 2022.
But the new Integra deal uses up the remaining incentives in the law. It only allows one of those types of deals per year in 2022 and 2023, which Panasonic and Integra have claimed. Lawmakers would need to extend the law to allow for such deals in 2024 and beyond.
Paul Hughes, deputy secretary for business development for the Kansas Department of Commerce, has already asked lawmakers to extend it. He said in January at least six projects, including the new semiconductor plant, were eligible for the incentives and interested in bringing megaprojects to the state.
“There is no doubt,” Hughes said, “that the APEX legislation has created momentum and established Kansas as one of the best places in the country, and the world, to do business.”
Some lawmakers are already questioning if the program is worthwhile. Republican Sen. Caryn Tyson said during a recent Senate Commerce Committee meeting that the amount of companies interested in the tax breaks suggests it may be too generous.
“If you were putting a product on sale for the market,” Tyson said last month, “and it was selling this –- like wildfire — you have to ask yourself, ‘did we give away too much?’”
Tyson did not support the original law passed in 2022. She said lawmakers should look at the law closely before signing off on an extension to make sure the state does not provide more than it can afford.
Republican Sen. Renee Erickson said monitoring the deals would be necessary. But she said the law helped the state land a massive economic development deal that it had historically lost out on.
Prior to the Panasonic deal, the state failed to land 11 different megaprojects worth more than $1 billion in investment since 2017.
“As much as I do not like incentives,” Erickson said, “we could either continue to lose out on opportunities or take a chance.”
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Dylan Lysen reports on politics for the Kansas News Service. You can follow him on Twitter @DylanLysen or email him at dlysen (at) kcur (dot) org.
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