January 4, 2024

Growing the Colorado Semiconductor Industry: Microchip to Expand in Colorado Springs

Today, Governor Polis and the Global Business Development Division of the Colorado Office of Economic Development and International Trade (OEDIT) joined Microchip, a leading producer of semiconductor devices, and the U.S. Department of Commerce, to announce a historic preliminary memorandum of terms (PMT) resulting in $90 million to modernize and expand a Microchip fabrication facility in Colorado Springs as part of $162 million in overall direct funding to support the company’s semiconductor supply chain.

Microchip, which employs nearly 1,000 Colorado workers, is the second semiconductor company to be identified for federal funding through the CHIPS and Science Act and the first in Colorado. This is the largest federal investment in CHIPS manufacturing announced by the Department of Commerce to date.

“Colorado is a leader in the semiconductor industry and we are proud to have companies like Microchip expanding in our state and creating more good-paying jobs for Coloradans,” said Governor Jared Polis. “I applaud the federal government’s commitment to investing in this cutting-edge industry and appreciate this partnership as Colorado’s semiconductor industry continues to grow.” 

A U.S.-headquartered, public multinational company, Microchip’s product portfolio supports over 125,000 customers across the industrial, automotive, consumer, aerospace and defense, communications and computing markets. This investment would enable Microchip to significantly increase its U.S. production of microcontroller units (MCUs) and other mature-node semiconductors critical to America’s defense, aerospace, auto, commercial, and industrial industries. Together with an expansion at a Microchip fabrication facility in Gresham, Oregon, the Colorado Springs expansion is estimated to nearly triple the share of semiconductors the company produces at these sites.

In Colorado Springs, Microchipwill expand several product lines to three to seven times their current capacity. Microchip expects the expansion to create 371 net new jobs at an average annual wage of $75,000, which is 118% of the average annual wage in El Paso County.

Recognizing the economic impact for Colorado and the key role that federal CHIPS funding will play in the expansion, Microchip was the first company approved for state incentives through Colorado’s CHIPS Refundable Tax Credit Program. Established by HB23-1260, sponsored by Representatives Matt Soper and Alex Valdez and Senators Mark Baisley and Kevin Priola, and signed into law by Gov. Polis in May 2023, the program is designed to aid Colorado companies in securing federal funding available through the CHIPS and Science Act.

Colorado is at the forefront of developing tomorrow’s technologies. This is a once-in-a-generation opportunity to support the development of the semiconductor and advanced manufacturing industries within Colorado, creating new good-paying jobs and contributing to a strong, diversified economy. We’re thrilled to see the Department of Commerce recognize Colorado and Microchip’s important role in restoring America’s leadership in semiconductor manufacturing,” said OEDIT Executive Director Eve Lieberman.

Through the CHIPS Refundable Tax Credits Program, five Enterprise Zone tax credits and Colorado’s Job Growth Incentive Tax Credit are refundable up to 80% of their value. In December 2023, the Colorado Economic Development Commission approved up to $10 million in performance-based CHIPS Refundable Tax Credits for Microchip, which was referred to as Project Hydrogen throughout the OEDIT review process and is expected to earn up to $22,617,000 over the next eight years in eligible Enterprise Zone credits.

“Demonstrating state support is key to securing this federal funding. By approving CHIPS Refundable Tax Credits for Microchip, the Colorado Economic Development Commission is helping to ensure that the company’s Colorado Springs expansion moves forward, securing Colorado’s place in the semiconductor industry and creating new good-paying jobs for Coloradans,” said Dan Salvetti, OEDIT’s Semiconductor Industry Manager.

“Colorado Springs boasts a large industry concentration of semiconductor and hardware manufacturing, world-class industry reliability, and low utility costs making it the ideal destination for Advanced Manufacturing,” said Johnna Reeder Kleymeyer, President & CEO of Colorado Springs Chamber & EDC. “Microchip’s third business expansion in Colorado Springs is welcome news and demonstrative of the positive impact of the CHIPS and Science Act, which has enabled the reshoring of thousands of well-paying manufacturing jobs to the Pikes Peak Region and incentivized a thriving business ecosystem for our region.”

Colorado is among the top states for semiconductors. The Semiconductor Industry Association places Colorado in the top 10 states with the resources and business ecosystem to support a strong semiconductor industry. In addition to major fabrication facilities, Colorado businesses support the entire semiconductor value chain from chip design and materials to fabrication and packaging. Today’s announcement builds on Colorado’s leadership in advanced industries and the technologies of the future, including Colorado’s recent designation as a quantum technology hub.