$75 million in federal funds flow into Colorado Springs to expand computer chip manufacturing

Everything’s coming up computer chips in Colorado Springs, with a second company in the city scoring big in the federal incentive program to lure chip manufacturing back to the United States. 

Entegris Inc., which is building a 130,000-square-foot manufacturing plant on land that once housed an old Hewlett Packard factory, was awarded $75 million as part of the CHIPS and Science Act, the Biden administration announced Wednesday.

In January, Microchip Technology, which also picked Colorado Springs to expand chip-related manufacturing, received $90 million to grow and modernize its fabrication plant in the city and hire another 400 workers. The award news was anticipated but not necessarily a sure thing, said Johnna Reeder Kleymeyer, CEO of the Colorado Springs Chamber & EDC. 

“We knew Entegris had applied but we didn’t know how much they would receive or if they would be successful,” Kleymeyer said. But, she added, by picking the city, “We knew it would be a differentiating factor that could help them.”

As part of qualifying for CHIPS funding, companies were encouraged to look for areas that spread out manufacturing and potential jobs throughout the country, as well as build environmentally friendly facilities that offer opportunities to a diverse workforce. 

Entegris, based in Massachusetts, already had operations in Colorado Springs two years ago when it picked the city for a $600 million expansion that would create 600 new jobs. The CHIPS Act incentive was a big reason for its decision, said Bertrand Loy, the company’s CEO and president. 

“This is by far the largest investment we are making and will be making in the U.S. for the next several years,” Loy said Wednesday in an interview. “And this is the only place where we are essentially bringing back manufacturing, so onshoring back manufacturing of products that today we only make in Asia.”

The cash incentive is expected to be paid starting next year as the new plant takes shape, he added. Entegris may also be eligible for other federal tax credits but that’s still being determined. Separately, the company received a local incentive package valued at $115 million from the city, development organizations, utilities and others.

“This is a testament to the importance of what we do in the ecosystem,” Loy said. “It’s also a testament to the shared commitment that we have in advancing the U.S. industry and ensuring a very robust and resilient semiconductor manufacturing ecosystem here in the U.S.” 

The local Entegris plant will manufacture FOUPs, short for Front Opening Unified Pod. FOUPs are essentially special cases for the silicon wafers as they are handled and transported during the manufacturing process. Computer chips are extremely sensitive so clients like Intel and Samsung need pristine environments while manufacturing. They’re currently made in Malaysia, which will continue manufacturing as a backup and to serve overseas customers.

“Given the criticality of this product, it was very important for our customers and very important for the administration that we actually bring back the production of this product here in the U.S.,” Loy said. 

The facilities will also make liquid filter membranes, which are used to cut down on contamination of chemicals, water and other materials used by chipmakers. 

The CHIPS Act, passed by Congress in 2022, provides $39 billion to incentivize the return of technology manufacturing to the states. While computer chips were invented in the U.S., by the late 1960s manufacturing began moving overseas to save on labor and materials. U.S. companies scrambled during the pandemic to get enough supply since these days, computer chips are in everything from cars, phones and even microwave ovens. There’s also added concerns of having sensitive technology and information originating in factories in China and elsewhere.

As part of qualifying for CHIPS funding, companies also must be environmentally friendly facilities that offer opportunities to a diverse workforce. 

Entegris has already teamed up with Microchip and local colleges and state universities to train a new local workforce. The company plans to spend $30 million in science, technology and math scholarships and internships over the next decade. But a STEM-related college degree isn’t necessarily a requirement to get hired.

“If you think about the 330 people at our existing site, only about 40 to 50 of them are scientists and directly STEM-related career paths,” said Bill Shaner, the Colorado-based president of Entegris’ advanced materials handling division. “So we have another 270 that aren’t. Out of those, there are 150 to 200 working in production areas and doing things like, they’re machinists or working on injection molding, which are fundamentally a fairly scientific type of processes. We have formal programs for process engineering development and I’d say that’s engineering without having a degree. Those are technicians and people are coming in from the outside.”

Construction on the facility, at 301 S. Rockrimmon Blvd., began in June 2023 and is expected to be completed by the end of this year, Shaner said. Production should start sometime in the second half of 2025. So far, about 20 people have been hired mostly as site and project managers. The first phase of hiring looks to have about 170 employed in the new facility by next year. In phase two, the company plans to get to its goal of 600 employees. 

The jobs, which will include technicians, chemists, engineers and warehouse operators, have a projected average annual wage of $74,940, according to the state’s Office of Economic Development and International Trade. The state’s economic development commission had earlier approved strategic incentives of $3.88 million, which average $6,500 per new job over five years. 

While Colorado Springs has struggled with the rest of the state on housing affordability and a weaker job market, Kleymeyer said that the city’s growing workforce and population is prepared to fill those openings, as students graduate and members area Military installations retire or exit locally at a rate of “250 to 300 a month” she said.