More than $300M in KS incentives for new semiconductor factory, 2,000 jobs in Wichita

Kansas is giving more than $300 million in state APEX incentives to Integra Technologies to build a new semiconductor factory in Wichita.

The Wichita megaproject could bring 2,000 jobs and more than $1.8 billion in capital investments to the state’s most populous city.

The project is the second approved under Kansas’ APEX incentive program, which was established last year in the state’s effort to lure Japanese tech firm Panasonic to build a new battery plant in De Soto, Kansas.

The Kansas Department of Commerce is touting the deal as the second-largest economic development project in the state’s history — behind the Panasonic project.

Details of the agreement with Integra remained secret until after the State Finance Council, which includes Kansas Gov. Laura Kelly and leadership from the Kansas Legislature, voted unanimously to approve the agreement. Kelly’s office released the contract about an hour after the vote.

“Integra’s investment will have ripple effects throughout Wichita and the entire state,” Kelly said at a press conference after the agreement was signed.

The project — which offers a little more than $304 million if Integra meets certain benchmarks — gained bipartisan approval with GOP legislative leaders Senate President Ty Masterson and House Speaker Dan Hawkins, from the Wichita area, applauding the project Thursday.

“We’re excited to have a Wichita company, somebody that’s here already and expanding and committing to Kansas,“ Masterson said. “Honestly, when it comes to economic development, probably the only thing we disagree on is actually who’s driving the train because it takes enabling legislation for any of it to happen.”

“Our region hasn’t seen something this transformative in years,” Hawkins said. “The possibilities for Wichita are endless.”

APEX subsidies include refundable tax credits, training costs and payroll tax breaks to a company and five of its suppliers. The incentives can add up to hundreds of millions of dollars in public money.

To receive the subsidies, the company must invest at least $1.5 billion within five years and employ at least 1,600 full-time employees each year for 10 years. It must also commit to stay in Kansas for at least 15 years. The state was steeply criticized for omitting job requirements in its deal with Panasonic.

In a news release, Integra said its expansion “would create at least 2,000 new jobs over the next five years.” It added that it would build a state-of-the-art headquarters and production facility that would be up one million square feet.

The project could also create more than 3,000 additional jobs in the Wichita area, according to estimates provided by Commerce.

Pay for the Integra jobs would average $51,000 Kansas officials said. The contract does not have any wage or salary commitments.

Brett Robinson, CEO of Integra, said the company wanted to grow in Kansas and that the incentives provided through APEX made Kansas’ offer competitive. Robinson said he could not say what other states Integra was considering because of existing non-disclosure agreements.

“This will be the largest expansion of its kind in the country,” Robinson said. A specific location for the plant, he said, had not been picked.

The Wichita Eagle identified Integra Technologies, the largest outsourced semiconductor assembly and test operation in the United States, as a front-runner for the APEX incentives program in November.

The deal could be canceled if Integra, which contracts in aerospace and defense work, fails to secure CHIPS Act funding, a multibillion dollar federal program approved by Congress to bolster domestic semiconductor manufacturing. Integra has spent at least $300,000 on lobbying for bills, including the CHIPS Act, in Washington, D.C., since 2020, according to data from Open Secrets.

Robinson told reporters he was confident Integra could secure the funding because of their standing in the semiconductor industry.

The project is being approved under the same mega-incentive program that allowed Kansas to offer $829 million in tax credits to Panasonic for building an electric vehicle battery plant in De Soto. Under that agreement, Panasonic could receive $500 million without hiring a single worker as long as they invest $4 billion in the plant.

Panasonic chooses Kansas for $4 billion mega battery factory, Gov. Kelly confirms

The bill was passed specifically for Panasonic but allowed the Commerce Department to negotiate a megaproject once a year as long as the policy is in place. Under the current law, the Wichita project would be the last one to receive incentives under the bill, which is scheduled to expire next year. Commerce has asked lawmakers to extend the policy.

Integra breaks the mold of what lawmakers and the Kelly administration said they were aiming for with the incentive tool. The goal of the tool, officials said, was to draw new industries to Kansas.

Integra is already based in Wichita.

However, Kansas Commerce Secretary David Toland said the Integra expansion still fit within the mission as a longstanding company that had offers to leave the state.

“When APEX was passed it was passed with the idea of growing the economy,” Toland said. “The primary way to do economic development is with existing companies.”

Wichita Mayor Brandon Whipple said he’d been aware of Integra’s potential expansion for years.

“It started out as a dream, then a goal and now a reality,” Whipple said. “CHIPS passed, and now it gave our economic development an opportunity to truly, truly go after this.”

As with Panasonic, the negotiation of this deal was cloaked in secrecy. The State Finance Council unanimously approved the deal without identifying the company or saying what was in the agreement before casting a vote.

Officials with direct knowledge of the Wichita-area project said anyone, including elected officials, briefed on the incentives negotiations was under a strict gag order and had to sign a nondisclosure agreement to be involved in negotiations.

The final agreement is exempt from the Kansas Open Records Act. The Commerce Department released Panasonic’s agreement to the press despite the exemption.

Rep. Sean Tarwater, a Stillwell Republican, said last month that if lawmakers reopen the bill he would be inclined to remove the KORA exemptions and require the administration to place strict job requirements in any future contract.

Under the law each new project will come with a half percent reduction in Kansas’ corporate income tax. The two projects combined will force a full percentage decrease in two years.

APEX sunset

The announcement comes as the Kelly administration asks lawmakers to extend the APEX program past its scheduled expiration date in 2024.

Kelly and Toland, touted the project as a major win for Kansas, coming just months after the state beat Oklahoma to land the Panasonic deal.

Rep. Stephanie Clayton, an Overland Park Democrat, called it proof that the Legislature’s efforts to pass APEX last year were paying off.

“It’s working, it’s doing what it’s supposed to do, which is attracting businesses, very large ones, to Kansas,” Clayton said.

But some lawmakers expressed frustration that the state moved so quickly to offer millions in incentives to corporations.

Tarwater said he was excited about the project but concerned about what it might mean for the state’s budget and workforce.

“We’re gonna have a hard time finding 4,000 people for the first one let alone more people for this one,” he said.

“We’re on the hook for $800 million to Panasonic. I’m not sure how large this deal is but our budget can only withstand so much. We most likely will be in a recession,” Tarwater said.

Rep. Troy Waymaster, a Bunker Hill Republican who chairs the House Appropriations Committee, said approval of the project may adjust the state’s budget plan and reduce the amount of money Kansas can put in its rainy day funds this year.

He said the state’s ability to weather additional APEX projects would depend on the economy.

“If things were to continue as the way they are now, yes (more projects are feasible),” he said. “If we hit a recession then it’d be more problematic.”

Contributing: Kevin Hardy and Jonathan Shorman and Jenna Barackman of The Star