Kathleen Gallagher: It's time to stop waiting on Foxconn. Let's look at a semiconductor plant for the site.
With no progress on manufacturing products or luring other companies to Wisconn Valley Science and Technology Park, Wisconsin’s deal with Foxconn has put local governments and state taxpayers in an increasingly desperate position.
In reality, Foxconn offers a Hobson’s choice — the illusion of options when there’s really just one: Waiting to see if the Taiwanese contract manufacturer can figure out what to make in Wisconsin.
Large and small LCD screens, ventilators and robotic coffee kiosks have all fallen by the wayside. The hope du jour is Foxconn’s recent and still preliminary agreement with Fisker, an electric car startup that has yet to produce its first vehicle, much less a second one that might be made here.
It’s time to stop waiting on Foxconn and decide what makes the most sense for the brand-new, 4,000-acre, $1.4 billion park that is well located between Chicago and Milwaukee. One compelling idea is a semiconductor manufacturing facility, or fab.
Federal government interest and market openings are creating the best opportunity in this area since the 1980s when Austin, Texas, lured two key semiconductor consortia —Microelectronics Computer and Technology Corp. (MCC) and Sematech — in a move that sparked local tech growth.
Washington has renewed interest in supporting more domestic computer chip production. President Joe Biden in late February signed an executive order initiating a review of critical supply chains; semiconductors are a top priority and he says he’ll seek $37 billion from Congress to bolster chip manufacturing in the U.S.
A growing chorus says that decreased production levels — U.S. fabs produce just 12% of the world’s chips — are a threat to America’s competitiveness, national security and supply chain resilience. Clearly, momentum is building for more fabs in the U.S.
Why not in Wisconsin?
California (23%), Texas (16%) and Oregon (15%) account for more than half the sector’s U.S. jobs, according to a Congressional Research Service report published in October. But other states are competing for them. Arizona last year offered an undisclosed amount of subsidies to land Taiwan Semiconductor’s planned $12 billion fab. New York in 2019 lured Durham, North Carolina-based Cree Inc. with a $500 million grant to build a $1 billion chip factory near Utica.
As far as I can tell, there are only a handful of fabs in the Midwest, including Skywater Technology’s Bloomington, Minnesota, facility, the only U.S.-owned pure-play semiconductor foundry. There are a lot of reasons our region should have more.
Key component for auto industry
The global chip shortage has been particularly troublesome for the U.S. auto industry, much of which is centered here. As electric vehicle production increases, chip demand will only grow. It makes sense to make chips near the auto companies.
Unlike states like Texas and California that have been challenged by shortages and outages, the Midwest offers reliable power at reasonable business rates from grids that aren’t strained by rapid growth and lack of surpluses.
Also, Wisconsin and other parts of the upper Midwest are among the least likely areas of the country to experience earthquakes — an important consideration for nano-scale integrated circuit manufacturing.
Along with stable power and low earthquake risk, fabs need engineers. There’s a popular narrative that all the technical people are on the coasts, but our region stacks up well.
"When you say Big Ten, most people think of powerhouse athletic programs," says Guri Sohi, a UW-Madison computer science professor whose research has helped shape the field and aided industry in developing faster, greener and more powerful computers. "What they don't think of is the fact that Big Ten universities produce a significant share of our nation's technical talent."
More than three years into Wisconsin’s deal, Foxconn has an empty factory building on an empty Racine County campus. A little more than a year into the New York deal, Cree plans to start moving tools into the factory’s clean room this summer and begin producing chips in January.
Given the growing use of super-fast computer chips in vehicles, phones, video games, industrial processes and more, a Wisconsin bet on a chip fab seems preferable to playing wait-and-see with Foxconn. In fact, the $4 billion of incentives Foxconn couldn’t use might be a calling card for other U.S. technology companies who would know how to use them.
Some believe quantum computing may modify or even replace semiconductors, but traditional electronics will coexist for some time, and the region is equipped for the new science. Three of the eight new federal quantum centers and institutes are located in Illinois, and University of Chicago scientists affiliated with the Chicago Quantum Exchange in February achieved an important step in developing a land-based quantum internet network.
Need activity soon, or dire consequences for taxpayers
There’s urgency here. If Foxconn fails to make its first big property tax payment of $30 million in January 2023, the Village of Mount Pleasant and Racine County along with Wisconsin taxpayers and utility customers will suffer. And although a recent lawsuit against Foxconn was dismissed, there likely will be others as the six-year statute of limitations approaches.
But perhaps even more urgent is our region’s ability to engage in key elements of the global economy. If we want to be part of the semiconductor story, who will take us there?
Wisconsin relied on politicians, Chamber of Commerce leaders and economic development agencies to bring Foxconn here. Maybe it’s time to tap our business and technical experts who understand the difference between low-tech electronic assembly and high-tech computer chip design and fabrication — and who have the knowledge it takes to change the narrative of the region.
Read previous columns by Kathleen Gallagher here.
Kathleen Gallagher was a business reporter at the Milwaukee Journal Sentinel and the Milwaukee Sentinel for 23 years. She was one of two reporters on the team that won a 2011 Pulitzer Prize for the One in a Billion series. Gallagher is now executive director of 5 Lakes Institute, a nonprofit working to grow the Great Lakes region's high technology entrepreneurial economy and culture. She can be reached at Kathleen@5lakesinstitute.org.