42. Oregon Semiconductor Industry Coalition
42. Oregon Semiconductor Industry Coalition
Strengthening Oregon’s Competitiveness in the U.S. Semiconductor Industry Oregon is a long‑standing hub of the U.S. semiconductor industry, supporting advanced research, process development, and manufacturing that underpin national technology leadership, economic resilience, and supply‑chain security. Historically, Oregon’s role centered on high‑value R&D and early‑stage process development, supported by strong institutions, skilled talent, and a stable investment environment. The industry is now shifting toward integrated, U.S.‑based manufacturing and foundry models that more tightly link R&D, pilot lines, and high‑volume production. Under this model, activities once insulated from cost comparison are now evaluated directly across states. Cost structure, regulatory certainty, workforce availability, and incentives increasingly determine where companies place production steps, expansions, and capital investment. While Oregon retains clear strengths, its competitive position is eroding relative to leading semiconductor states such as Arizona, New Mexico, and Ohio. Oregon now faces higher overall tax burden, greater regulatory complexity with uncertain timelines, and growing affordability challenges for the manufacturing workforce. Without targeted policy modernization, these conditions increase the risk that future semiconductor investment, expansion, and job growth will shift out of Oregon. Priority 1: Restore Cost Competitiveness Through Corporate Activity Tax Reform Semiconductor manufacturing is highly input‑intensive and capital‑heavy, with long, multistage supply chains. Oregon’s Corporate Activity Tax (CAT)—a gross receipts tax layered on top of the corporate income tax—creates tax pyramiding that compounds cost at every stage of production. This structure disproportionately impacts advanced manufacturing and is uncommon among competitor states. As operations become more integrated across U.S. sites, CAT exposure increasingly influences where production steps are located. Suppliers often pass CAT costs through to Oregon‑based customers, further increasing operating costs. Absent reform, companies are incentivized to move certain manufacturing activities out of Oregon to avoid recurring CAT liability. Recommendation: Modernize the Corporate Activity Tax by significantly lowering the rate and/or creating exemptions or deductions for advanced manufacturing inputs to reduce tax pyramiding and restore competitive parity.
Priority 2: Cost Protection for Emissions-Intensive, Trade-Exposed Manufacturing under Greenhouse Gas Reduction regulations Semiconductor fabrication relies on specialized process gases and chemistries that are essential to manufacturing and often have no viable near‑term substitutes. The industry has already invested decades in emissions abatement, chemical substitution where feasible, and energy efficiency. Most advanced facilities now operate at or near the limits of best‑available technology, with few remaining reduction pathways. Oregon’s Climate Protection Program (CPP) risks imposing compliance costs without corresponding technical solutions for further reductions. The CPP will act as another costly tax on production when no viable options exist to reduce emissions. Because competing semiconductor states do not impose similar requirements, this creates a cost asymmetry that directly affects where manufacturing work is located within the U.S. Recommendation: Whether Oregon continues under the current Climate Protection Program or adopts a market‑based system, emissions‑intensive, trade‑exposed semiconductor manufacturing must be protected through credit for early reductions, cost‑protected or no‑cost compliance mechanisms for facilities using best‑available technology, and exemptions for unavoidable process emissions where no feasible alternatives exist. Priority 3: Streamline and Clarify Air Toxics Permitting (Cleaner Air Oregon) Semiconductor R&D and manufacturing require frequent process changes and new chemistries. Oregon’s Cleaner Air Oregon program is among the most complex and costly air toxics systems in the nation, covering hundreds of compounds and relying on cumulative risk modeling without defined timelines. Moreover, DEQ continues to change implementing rules creating significant uncertainty for manufacturers that are in the program or will need an air permit in the future. Comparable states regulate air toxics with fewer chemicals, clearer thresholds, and much shorter and predictable permitting timelines. Undefined timelines create uncertainty for expansions and can delay or constrain R&D activities. Chemical‑specific limits also restrict innovation by triggering additional modeling and permitting for routine process changes. And constant changes to the regulations create significant regulatory uncertainty. Recommendation: Simplify Cleaner Air Oregon by establishing enforceable permitting timelines and adopting a simplified process and framework that protect public health while providing operational certainty and flexibility. Priority 4: Affordability and Workforce Retention Oregon has made progress in semiconductor workforce development, but cost‑of‑living pressures undermine recruitment and retention of technicians and early‑career professionals essential to fab operations. Housing costs, individual tax burdens, and high
energy and fuel prices increasingly place Oregon at a disadvantage relative to competitor states. Recommendation: Address affordability drivers—taxes, housing, energy, and fuel costs—to stem talent leakage and sustain workforce competitiveness. Priority 5: Incentives – Preserve and Modernize Oregon’s Competitive Toolkit Semiconductor investments are among the most capital‑intensive in the global economy and highly sensitive to upfront and ongoing costs. Oregon has benefited from significant investment enabled by the Strategic Investment Program (SIP), which remains critical and must be preserved. However, competitor states now offer broader incentive portfolios, including monetizable incentives that directly reduce project costs and execution risk. Recommendation: Protect the Strategic Investment Program and expand Oregon’s incentive toolkit to include monetizable R&D, capital investment, payroll, and infrastructure incentives comparable to leading semiconductor states. Priority 6: Higher Education and Workforce Investment Oregon has improved alignment between education and workforce systems and semiconductor industry needs, but further growth requires greater scale and coordination. Fragmented credentialing, limited training capacity, and inconsistent pathways constrain workforce responsiveness relative to peer states. Recommendation: Expand technician training capacity; increase cleanroom infrastructure and high‑school‑to‑degree pathways; improve statewide coordination and credential portability; and strengthen outcome‑based accountability aligned to semiconductor workforce demand. Conclusion Semiconductor investment decisions are long‑term, capital‑intensive, and highly competitive. Targeted modernization of tax policy, regulatory frameworks, incentives, and workforce systems is essential for Oregon to retain and grow its role as a national semiconductor leader—supporting innovation, supply‑chain resilience, and sustained high‑wage employment.
Parent: Appendix E: Submissions & Feedback · PDF: pp. 369-371