The passage of the Creating Helpful Incentives to Produce
Semiconductors (CHIPS) Act has led to widespread enthusiasm regarding
the possibility of increased manufacturing of semiconductors in the United
With the likelihood of the U.S. experiencing growth in the
manufacturing of semiconductors, researchers at Ball State University have
pinpointed the locations across the country most likely to experience
expansion of semiconductor chip production in the coming years.
Plant Location Decisions in the Wake of the CHIPS Act,” a recently
published study from Ball State’s Center for Business and Economic Research
(CBER), identifies 83 U.S. counties, sorted into three tiers, in which new
plant locations are most likely. The study was co-authored by CBER researchers
Dr. Michael Hicks and Dr. Dagney Faulk.
“The CHIPS Act offers incentives to increase the
potential for growth in domestic semiconductor manufacturing,” Dr. Hicks said.
“Combined with the costly disruptions of chip production during COVID-19, it is
especially likely the United States will see new semiconductor production. Where
that production will occur is of substantial policy interest across much of the
The CBER study combines data from the Semiconductor
Industry Association, the U.S. Census Bureau, the Bureau of Economic Analysis,
secondary studies, and other private sources to model the potential locations
of semiconductor manufacturing firms. Among the more important variables in
explaining the expansion of the semiconductor industry are the educational
attainment of the workforce (bachelor’s degree or higher), the share of
residents in graduate school, population growth, and high unexplained
productivity (generalized agglomerations).
The “Tier 1” metropolitan areas considered most likely to
be considered for a new semiconductor plant, according to the CBER study, are:
Boulder, Colo., Chicago, Ill.; Columbus, Ohio; Dallas-Fort Worth-Arlington,
Texas; Denver-Aurora-Lakewood, Colo.; Houston-The Woodlands-Sugarland, Texas;
Madison, Wisc.; Miami-Dade County, Fla.; New York-Northern New Jersey-Long
Island; San Diego-Carlsbad, Calif.; Seattle-Tacoma-Olympia, Wash.; and St.
The report also identifies 20 Tier 2 and 17 Tier 3
potential plant locations, which are considered “likely” and “somewhat likely”
compared to Tier 1.
“Tier 1 locations are the most likely places to be
selected for new semiconductor manufacturing facilities,” Dr. Faulk said. “These
locations all possess sufficiently large numbers of available workers and are
large metropolitan areas with multiple suitable counties or at least one very
suitable county for expansion.”
The study also compared its results to a separate list of
new proposed plants reported to the Semiconductor Industry Association; out of
those 20 locations, the CBER model correctly predicts 18 of them. The two
locations not included in the CBER study—West Lafayette, Ind., and Midland
Metropolitan Area-Bay City, Mich.—both nearly met the researchers’ inclusion
Though the U.S. currently manufactures a large share of
the world’s microconductors (microchips), recent widespread supply disruptions
caused significant production delays in automobiles, appliances and consumer
The CHIPS Act of 2022 provides substantial funding and
incentives for semiconductor and related firms to locate, upgrade, and expand
within the United States. The Act provides $52.7 billion in emergency
supplemental appropriations. The largest share, $50.0 billion over five years, is
used to establish a CHIPS for America Fund to provide funding for provisions
authorized in the FY2021 National Defense Authorization Act. These provisions
required the development of domestic semiconductor manufacturing capability,
research and development, and workforce training programs. The largest share is
allocated to legacy chip production, which is essential to the military, automotive,
and other industries.
Ball State’s Center for Business and Economic Research
(CBER) conducts timely economic policy research, analysis, and forecasting for
a public audience ranging from public officials and policymakers to journalists
and citizens. For more than 50 years, the center’s work has been a trusted
source for high-quality, nonpartisan, and data-driven information.
A library of CBER’s
research and data projects is publicly available at projects.cberdata.org.