Semiconductor maker planning $1.8B plant, 750 jobs in Indiana

Purdue President Mitch Daniels and Indiana Gov. Eric Holcomb took part in Wednesday's announcement. (IBJ photo by Peter Blanchard)

Bloomington, Minnesota-based SkyWater Technology announced plans Wednesday to build a $1.8 billion semiconductor R&D and production plant adjacent to the Purdue University campus in West Lafayette.

The plant is expected to create 750 high-wage jobs within five years of opening, according to the Indiana Economic Development Corp., which plans to support the project with more than $70 million in incentives.

Gov. Eric Holcomb, Indiana Secretary of Commerce Brad Chambers and Purdue University President Mitch Daniels joined executives from SkyWater to make the announcement.

Skywater, Purdue and state officials said the project will hinge on their ability to land federal funding though the Creating Helpful Incentives to Produce Semiconductors, or CHIPS, program. Officials did not specify how much federal funding the project would need, nor did they provide an expected starting date for the development, which would take an estimated three years to complete.

The proposed 600,000-square-foot semiconductor manufacturing facility, which includes 100,000 square feet of cleanroom space, is expected to be built in Purdue’s Discovery Park District, a 400-acre, mixed-use development. Investing companies in the park have access to Purdue faculty experts and graduates preparing to work in their industry.

SkyWater bills itself as the only U.S.-investor owned pure-play semiconductor and technology foundry. The company, which has 600 employees in Minnesota and Florida, went public in April 2021, raising about $97 million in its initial public offering. The firm was previously part of San Jose, California-based Cypress Semiconductor, but became an independent company in 2017 when it was acquired by Oxbow Industries, a private equity firm headquartered in Minneapolis.

The company, which makes integrated circuits for customers including Infineon, D-Wave, Microsoft and Steifpower, lost $16.6 million in the first quarter on revenue of $48.1 million. Shares closed at $9.46 each Tuesday, down from their IPO price of $14.

The IEDC said it is committing an investment in SkyWater Technology of up to $29 million in the form of conditional tax credits and $1 million in training grants based on the company’s job-creation plans. The IEDC also pledged an investment of $20 million in redevelopment tax credits based on the company’s investment plans; up to $20 million in conditional structured performance payments; up to $500,000 in innovation vouchers; and $1 million in Manufacturing Readiness Grants. The company isn’t eligible to claim the incentives until it reaches investment and hiring goals.

Purdue, the Greater Lafayette Commerce, the city of West Lafayette, the city of Lafayette, Tippecanoe County and Duke Energy offered additional incentives.

Last July, Skywater executives met with Holcomb to discuss opportunities in Indiana to support increased domestic semiconductor manufacturing.

The tech company announced plans in November to open research space at the WestGate@Crane Technology Park in Odon. The company is a U.S. Department of Defense-accredited supplier, which prompted it to open a facility near the Naval Surface Warfare Center, Crane Division.

SkyWater CEO Thomas Sonderman attended the Global Economic Summit held in Indianapolis this past May. He said the company viewed Indiana as taking big steps to expand its commitment to the microchip space, both in terms of educational commitments and by offering incentives for would-be manufacturers.

During the summit, the state announced the creation of the Accelerating Microelectronics Production & Development task force, which is intended to strengthen Indiana’s role in semiconductor manufacturing through procurement of new projects and federal funding.

“This endeavor to bolster our chip fabrication facilities will rely on funding from the CHIPS Act,” Sonderman said Wednesday in written remarks. “Federal investment will enable SkyWater to more quickly expand our efforts to address the need for strategic reshoring of semiconductor manufacturing. Through the support and partnership of the Indiana Economic Development Corporation, we have a unique opportunity to increase domestic production, shore up our supply chains and lay the groundwork for manufacturing technologies that will support growing demand for microelectronics.”

Purdue has taken several recent steps to address domestic semiconductor manufacturing. Officials said the United States was responsible for 37% of the total global output of chips in 1990, but that fell to 12% in 2021 as countries including China, Japan, South Korea and Taiwan began to dominate the industry.

In May, Purdue launched its Semiconductor Degrees Program, a set of degrees and credentials for both graduate and undergraduate students. The university said it launched the program, in part, to respond to the projected need for at least 50,000 trained semiconductor engineers in the United States.

In late June, Purdue began a partnership with MediaTek Inc. to open the company’s first semiconductor chip design center in the Midwest, to be housed in Discovery Park District.

“Today’s announcement marks a dramatic advance toward multiple strategic goals of Purdue’s last decade: enriched academic and career opportunities for our students; new research possibilities for our faculty; a transformed, more attractive environment on and adjacent to our campus; and the latest demonstration that Purdue and Greater Lafayette are now the hot new tech hub of a growing, diversifying Indiana economy,” Purdue President Mitch Daniels said in prepared remarks. “Even for the place that specializes in them, this constitutes a genuine giant leap.”