Time is running out for multi-billion-dollar Kansas megaprojects as federal funds dwindle

The fate of two Kansas megaprojects and thousands of promised jobs in the Wichita area likely hinge on whether semiconductor manufacturers can secure federal funding in the next 90 days.

What’s left of the CHIPS and Science Act incentive money will be awarded by the end of 2024, U.S. Commerce Secretary Gina Raimondo has said.

More than $35 billion of the $39 billion allocated for incentive money through the CHIPS Act has already been awarded for projects spread across 23 states. Kansas is not one of them.

Two proposed facilities, a $1.8 billion Integra Technologies semiconductor plant just outside Wichita in Bel Aire and a $1.9 billion EMP Shield plant in Coffey County, remain in consideration for the dwindling federal funds.

“The Department is continuing to conduct rigorous evaluation of applications to determine which projects will advance U.S. national and economic security, attract more private capital, and deliver other economic benefits to the country,” the U.S. Department of Commerce said in a statement.

On Tuesday, a $304 million state incentive package for Integra expired because of a lack of federal funding. The agreement, inked in February 2023, was renewed for two six-month periods in hopes that CHIPS money would be secured.

“Although the APEX incentive package that was authorized by the Kansas Legislature for Integra will expire Oct. 1, the State of Kansas will utilize standard incentives to fully support both companies’ CHIPS applications,” Kansas Department of Commerce spokesperson Patrick Lowry said of the Integra and EMP Shield applications. “The CHIPS for America process is still underway, so we are unable to provide specifics or more information at this time.”

Proposed Kansas megaprojects

Integra, the largest outsourced semiconductor assembly and test operation in the U.S., is based in Wichita. The company has said it hopes to build a state-of-the-art headquarters and production facility that would be up to one million square feet and create at least 2,000 new jobs.

If the megaproject comes to fruition, it could mean more than 3,000 additional jobs in the Wichita area, the state commerce department has estimated. But without federal money, none of that seems likely.

“There’s no commercially viable way to do this without federal funding, and that is why the CHIPS Act passed in the first place,” Integra CEO Brett Robinson said last year.

Integra said in a statement Monday that it is forbidden from providing updates on its efforts to secure federal incentives. A spokesperson did not respond when asked whether the company would continue to pursue expansion in Sedgwick County if it’s passed over for CHIPS money.

Local government incentives, including a 10-year tax abatement for Integra and $750,000 for workforce development and training, will go into effect only if federal funds are secured.

Peter Keegan, president of EMP Shield in Burlington, said the U.S. Commerce Department has informed his company that there is no set date for deciding whether its application will be approved or denied.

“They’ve asked questions. We finished answering all of their questions,” Keegan said. “As far as we know, it’s in their hands to give us a yes or a no at some point but they haven’t committed to a time frame.”

Several ancillary companies have already broken ground on microelectronics fabrication facilities in Coffey County. Keegan said EMP Shield won’t abandon expansion plans outright if it isn’t selected for CHIPS investment.

“We at least investigated it with our financial partner, and we will make an effort if it is not pursued by the federal government,” Keegan said. “It will look, I don’t want to say significantly different, but it will look different if we get private money into this. The local ownership obviously would be a lot lower.”

‘Hard to understand exactly why’

Press conferences announcing the Integra and EMP Shield megaprojects early last year were well-attended by state and local officials who were brimming with optimism about the prospects of both.

“Our region hasn’t seen something this transformative in years. The possibilities for Wichita are endless,” Speaker of the House Dan Hawkins, a Wichita Republican, said at the Integra announcement.

Now, many of those same officials are being tight-lipped about the companies’ prospects. Hawkins, Senate President Ty Masterson and Governor Laura Kelly did not respond to requests for comment Tuesday.

In a statement, U.S. Sen. Jerry Moran said he will continue advocating for one or both of the state’s proposed megaprojects to receive funding through the 2022 federal program designed to strengthen the domestic semiconductor supply chain.

“Kansas is a premier location for investment because of our talented manufacturing workforce, our central location within the country, and a business environment that encourages growth,” Moran said.

“Kansas semiconductor companies have what it takes to successfully leverage federal investment into more jobs and economic growth in Kansas, and I will continue working to highlight the capabilities of Kansas businesses.”

Sedgwick County Commissioner Jim Howell said he’s extremely disappointed that the Bel Aire project has not yet been selected for CHIPS funding.

“I’m so impressed by Integra. I was very bullish in our offer to the company,” Howell said. “I was feeling very confident we were going to get something out of this, and to be at this juncture where twenty-three states have gone ahead of us is shocking.”

The U.S. Department of Commerce has received more than 670 statements of interest from companies and nearly 400 pre-applications and full applications for CHIPS funding, an agency spokesperson said.

“This is smart to award this CHIPS manufacturing back to U.S. companies. This needs to happen,” Howell said. “But how in the world could we have possibly done more than we did? We’re a leader of technology. We’re a leader on this in terms of what could be done here.

“I’m optimistically holding my breath that maybe there’s more good news coming. But I also know that we’ve lost on these things in the past, so it’s hard to understand exactly why things happen the way they do.”

Lowry, the state commerce department spokesperson, said the two Kansas megaprojects are far from lost causes.

“The current amount of unallocated CHIPS Act funding is considerable, with plenty of money available to support the Integra and EMP Shield applications,” Lowry said. “Both of the projects stand on their own merit, and the State of Kansas remains fully supportive of them.”