Microchip bill seeks to meet federal program requirements

A proposal that would attempt to align Nebraska’s economic development structure with the requirements of a federal microchip grant program was considered by the Banking, Commerce and Insurance Committee Jan. 31.

The CHIPS and Science Act, passed by Congress in 2022 to spur U.S. semiconductor manufacturing capacity, contains provisions that provide grant funds to qualifying states to help develop the industry. Omaha Sen. Mike McDonnell said his LB617 would create the necessary framework for Nebraska to match any federal funds provided to the state for a semiconductor manufacturing company.

The bill would transfer $20 million from the state’s Cash Reserve Fund to the Economic Development Cash Fund, which would be created by the bill and housed within the state Department of Economic Development. DED then would provide a grant to a community college serving a metropolitan class city to offer skill-specific professional qualifications — known as microcredentials — to support manufacturing in the state in conjunction with the CHIPS and Science Act.

Omaha currently is the state’s only metropolitan class city.

McDonnell said the bill would provide state grant funds to Metropolitan Community College for education expansion and curricula development necessary for a Nebraska-based entity to qualify for grant funds under the federal law.

“[The bill] aligns our current economic development policy to better demonstrate to the U.S. Department of Commerce and semiconductor manufacturers that Nebraska is an engaged and willing partner in securing a domestic supply chain of semiconductors and microprocessor components,” he said.

Nine companies have indicated a desire to locate in Nebraska in order to engage in the semiconductor industry should the bill pass, McDonnell said, which could “make the ‘silicon prairie’ a real thing.”

Bryan Slone, president of the Nebraska Chamber of Commerce and Industry testified in support on behalf of the state chamber, the Greater Omaha Chamber and the Lincoln Chamber of Commerce.

Slone said he spent the early days of his career in the semiconductor industry in Silicon Valley. Since that time, the US has lost its competitive advantage in the industry, he said, and the effect of the resulting weaknesses in the country’s microchip supply chain were made painfully evident during the pandemic.

With passage of the CHIPS and Science Act, states are in competition to gain a foothold in the semiconductor industry, he said, and Nebraska is in a good position to compete if it can develop the necessary workforce.

“This would be a game changer for the state,” Slone said.

Randy Schmailzl, president of Metropolitan Community College, also testified in favor of the bill. The college “checks all the boxes” in relation to federal requirements for CHIPS and Science Act funding, he said, due to its location and the student population it serves.

The bill’s provisions would allow Metropolitan to train individuals to obtain the type of associate degree required to work in a semiconductor factory in the Omaha area, he said.

No one spoke in opposition to LB617 and the committee took no immediate action on it.