Lawmakers consider expanding Oregon CHIPS fund after state undersubscribed grants

Salem — At a March 19 meeting of the House Committee on Economic Development, Small Business and Trade, Business Oregon officials and industry witnesses urged lawmakers to expand and retool the Oregon CHIPS Fund after the original program failed to spend all of the money aimed at semiconductor manufacturers and suppliers.

The Oregon CHIPS Fund “did allocate … $240,000,000 for primarily for direct incentives for semiconductor manufacturers and suppliers,” Shannon Carney, advanced manufacturing program coordinator at Business Oregon, told the committee. She described 21 awards across two rounds, with “just under $148,000,000” dispersed to date and 10 active agreements, plus two expected to close soon.

Why it matters: lawmakers, state economic development staff and local officials warned that Oregon risks losing projects to faster-moving states unless the legislature makes the program more flexible. Representative Daniel Winn, chair of the committee and sponsor of House Bill 2,277, proposed removing the requirement that state awards be tied to applicants for the federal CHIPS Act and extending the period in which the governor and Business Oregon can make awards.

Business Oregon and the governor’s office defended the program’s initial impact while outlining the problem that left money unspent. “One key element of the program is that companies had to be actively engaging. They had to be applying to the federal CHIPS Act, in order to be eligible for this program,” Carney said. That federal tie, she and others said, excluded many smaller Oregon suppliers and startups whose projects or timelines did not match the federal application windows.

Sarah Means, semiconductor manager for the governor’s office, emphasized Oregon’s existing industry strength in testimony introducing the program: “Oregon plays a critical role in the nation's efforts to regain technological leadership and manufacturing capabilities in the semiconductor industry.” Means cited Oregon’s 50‑year semiconductor ecosystem, export figures and workforce concentration as reasons to preserve and adapt state incentive tools.

Witnesses from the private sector and local government described specific gaps. Dan Diaz, economic and community development director for the city of Hillsboro, said Oregon needs both flexible incentives and ready industrial land: “If we do not have sites, new companies cannot establish here. Existing companies will struggle to locate here.”

Several small and midsize suppliers testified that the federal linkage prevented them from accessing state funds. Kendon Shirley, founder and CEO of semiconductor startup Kairos Sensors, said his firm was among those excluded and urged passage of HB 2,277: “I’m one of the companies trying not to leave Oregon and I'm also one of the 13 companies not currently supported by the Oregon CHIPS Act.” Shirley described federal grants his company has won and said modest state matching awards helped secure patents and follow‑on federal funding.

Some witnesses said Oregon’s program has demonstrable economic returns. Carney and other presenters noted that awards span five counties and support projects ranging from R&D centers to production lines. The fund also has transferred $5,000,000 into a CHIPS childcare fund established in a short session last year, and Business Oregon said the governor plans to transfer an additional $10,000,000 to a semiconductor talent‑sustaining fund.

Concerns about competition and timing surfaced repeatedly. Committee members and witnesses pointed to Arizona and Texas as states actively landing semiconductor projects and called for a package of actions beyond the grant program — including site readiness, workforce programs and regulatory streamlining — to retain and recruit investment.

Representative Winn described two parallel proposals: a dash‑1 amendment to House Bill 2,277 that would allow Business Oregon and the governor to award grants and loans to entities that have not applied for federal CHIPS assistance and remove a June 30, 2025 reversion date; and a related bill, House Bill 2,322 (the “Fostering Innovation Strength at Home” or FISH bill), that would use CHIPS fund money as a template for a broader manufacturing and R&D program covering other targeted industries. Winn said a forthcoming dash‑2 amendment to HB 2,277 would lower a specific appropriation limit in that bill while setting aside $25,000,000 in the companion bill for broader targeted‑industry manufacturing support.

What remained undecided: committee members did not vote on HB 2,277 or HB 2,322 at the March 19 meeting. The informational session and public hearing produced multiple suggestions for specific fixes — including removing the federal‑application requirement, increasing flexibility for land purchases, and aligning state and local incentives — but no final legislative action was taken that day.

Industry and local officials urged continued attention and quicker options for companies that need capital or site commitments now. Mark Blythe, chief marketing officer for Kokusai Electric, said the mere prospect of an Oregon CHIPS award “has been a key consideration in our decision to focus on Hillsboro,” and that the program’s current rules prevented his company from completing a federal concept paper on time.

The committee heard similar testimony from representatives of Oregon Business & Industry, the Silicon Forest Partnership, Mitsubishi Pure Chemicals and several semiconductor suppliers and startups, all urging continued state investment and a policy response that addresses land, workforce and timing.

The hearing closed with lawmakers agreeing to hold further questions and debates as amendments to HB 2,277 and HB 2,322 are finalized and posted.

Looking ahead: Representative Winn and other committee members said they expect additional amendments to be filed and indicated the committee will return to the matter once draft language is available and fiscal impacts are clearer. Business Oregon said it will continue administering the active contracts while working with the committee on potential program revisions.

Ending note: witnesses recommended a coordinated, multi‑year approach that pairs targeted incentives with site readiness and workforce development to preserve Oregon’s semiconductor cluster and support suppliers and startups across the state.