Indiana embarked on a groundbreaking venture to transform 10,000 acres of agricultural land into an innovation park. State officials engaged with key players in the semiconductor industry from South Korea, Taiwan, and Japan, as well as hosting esteemed members of the Biden administration to showcase a $100 million expansion of chip research and development facilities at a local university. The ultimate objective behind these actions was to position Indiana as a leading hub for microchip manufacturing and research.
Brad Chambers, former commerce secretary responsible for economic development in Indiana, remarked, “We’ve never undertaken anything of this magnitude before. It’s a multibillion-dollar commitment by the state to prepare for the transformations occurring in our global economy.”
This move by Indiana serves as a litmus test for the Biden administration’s endeavor to stimulate regional economies through the CHIPS and Science Act, a landmark funding package worth $52 billion set to be distributed in the coming months. The aim of the program is to bolster domestic semiconductor manufacturing and research, as these components play a pivotal role in the US-China tech supremacy battle.
The administration has promised that the CHIPS Act will generate high-paying tech jobs and foster start-ups in areas that traditionally lack a foundation in the tech industry. In a speech last year, Commerce Secretary Gina Raimondo expressed optimism regarding the program’s ability to support “different places in the heartland of America,” adding, “I believe we will unleash an incredible surge of entrepreneurship and capital opportunities.”
Indiana is thus an ideal case study for evaluating the efficacy of the administration’s efforts. Unlike Arizona and Texas, which have established chip-making plants, Indiana possesses limited experience in the intricate manufacturing processes underlying these components, aside from electric vehicle battery manufacturing and select defense technology projects involving semiconductors. The state now aims to catch up to its counterparts by attracting major chip manufacturing plants.
Senator Todd Young, a Republican from Indiana, supports this push and played a role in authoring the CHIPS Act. He has been a vocal proponent of increasing funding for tech hubs. Indiana-based companies and universities have applied for multiple CHIPS Act grants, aiming not only for chip manufacturing but also research and development opportunities.
Some economists question the feasibility of the Biden administration’s ambitions to transform farmland into advanced chip factories. Silicon Valley and the Boston tech corridor took decades to flourish, benefiting from strong academic research institutions, prominent anchor companies, a skilled workforce, and ample investor support. Many other regions lack this combination of assets. Indiana has long grappled with a brain drain, with its educated youth often migrating to larger cities in search of employment, according to the Indiana Chamber of Commerce. Proponents of industrial policy see these investments as a means to reverse this trend and counter the broader deindustrialization afflicting Rust Belt communities.
However, it remains uncertain whether the program can achieve such lofty goals, or if the Biden administration may choose a more distributed approach to investments or concentrate them in select hubs. “Many pieces have to come together,” says Mark Muro, a senior fellow at the Brookings Institution. He believes the initial $500 million government allocation for tech hubs is insufficient and estimates that $100 billion in aid would be required to establish ten sustainable tech hubs.
Indiana does possess certain advantages. The state boasts abundant land and water resources, critical for large chip factories that rely on water for cooling equipment and rinsing silicon wafers. Moreover, the region enjoys a relatively stable climate conducive to the highly sensitive production process. Purdue University, with its engineering school, is another asset, promising to produce the requisite technicians and researchers for chip manufacturing.
Nevertheless, Indiana faces stiff competition. In January 2022, the state lost a bid to Ohio for Intel’s $20 billion plan to build two factories. Brad Chambers acknowledges the lessons learned from this setback, emphasizing the need for a more attractive package encompassing land, infrastructure, and workforce programs when courting major chip companies.
Despite this, Indiana managed to secure a $1.8 billion investment from SkyWater, a Minneapolis-based chip-maker, to construct a factory adjacent to Purdue’s campus, creating 750 jobs. State officials recognize that a complete tech transformation could take years, particularly without the presence of anchor plants from industry giants like TSMC, the world’s largest producer of cutting-edge chips.
Senator Young and other state leaders are currently in talks with prominent chip manufacturers to secure a contract comparable to Intel’s $20 billion commitment to Ohio. Young states, “All net new job creation in my lifetime has been created by new firms and young firms.”
The focus of Indiana’s chip-making metamorphosis lies in the LEAP (Lebanon Economic Advancement Park) Innovation District, located in Lebanon, a town surrounded by vast expanses of farmland between Indianapolis and West Lafayette. The park’s development coincided with the formulation of the CHIPS Act. In 2019, Senator Young co-authored the Endless Frontier Act with Senator Chuck Schumer, which served as the precursor to the CHIPS Act.
Throughout the progression of the bill through Congress, Young maintained regular communication with Eric Holcomb, Indiana’s governor, and Mitch Daniels, the former president of Purdue, to fine-tune the proposal’s details. Young recognized that Indiana and the broader heartland region stood to gain disproportionately from the investments being made.
Holcomb and Chambers then devised a plan for a technology manufacturing park, subsequently purchasing farmlands in Lebanon to establish the LEAP Innovation District. In May 2022, Holcomb unveiled LEAP, commencing the installation of new water and power infrastructure, as well as a new road. Holcomb, Chambers, and Young embarked on trips to various countries, meeting with executives from chip companies such as SK Hynix and TSMC, offering incentives such as affordable rent in the LEAP district, tax incentives, access to Purdue’s labs and researchers, and training programs at Ivy Tech Community College.
These efforts bore fruit when Indiana successfully secured SkyWater’s $1.8 billion chip facility, besting four other states in the process. SkyWater cited the excellent coordination between state officials and Purdue’s new president, Mung Chiang, who introduced the nation’s first semiconductor degree programs to cultivate a skilled workforce for chip manufacturers.
In September, Ms. Raimondo and Secretary of State Antony J. Blinken toured Purdue’s chip research clean rooms and reviewed plans for a $100 million expansion of semiconductor research and development, including the addition of 50 new faculty dedicated to advanced chip science. “I think you have all the ingredients,” Raimondo remarked during a discussion with Holcomb and Chiang. Indiana now awaits news on the amount of CHIPS Act funding they will receive.
While some early outcomes from the LEAP district initiative paint a mixed picture of future prospects, the park did secure its first tenant in May 2022, although it was Eli Lilly, a pharmaceutical company rather than a chip maker.
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