Over the past 14 months, Indiana has begun converting 10,000 acres of corn and bean fields into an innovation park. The heads of state met with the chief executives of semiconductor giants in South Korea, Taiwan and Japan. And they hosted top Biden administration officials to unveil a $100 million expansion of chip research and development facilities at a local university.
The actions were driven by one main goal: to turn Indiana into a microchip manufacturing and research hub, almost from scratch.
“We’ve never done anything on this scale,” said Brad Chambers, who is Indiana’s commerce secretary in charge of economic development. “This is a multibillion-dollar state commitment to be prepared for the changes happening in our global economy.”
Indiana’s moves are a test of the Biden administration’s efforts to stimulate regional economies through the $52 billion CHIPS and Science Act, a landmark funding package planned to begin rolling out in the coming months. The program is intended to boost domestic manufacturing and research of semiconductors, which serve as the brains of computers and other products and have been central to the US’s battle with China for tech primacy.
The Biden administration has promised that the CHIPS Act will produce high-paying tech jobs and start-ups even in areas with little tech industry foundation. In a speech in May last year, Commerce Secretary Gina Raimondo, who oversees the chips program, said she was looking at how the program could help “different places in the middle of America.”
He added, “I think we’re really going to unleash an incredible wave of entrepreneurship and capital opportunity.”
That makes Indiana a prime case study for whether the administration’s efforts will pan out. Unlike Arizona and Texas, which have long had chip manufacturing plants, Indiana has little experience with the complex manufacturing processes underlying components, beyond electric vehicle battery manufacturing and a few projects of defense technology involving semiconductors.
Indiana now wants to catch up with other areas where large chip manufacturing plants have landed. The push was supported by Senator Todd Young, a Republican from Indiana, who was a co-author of the CHIPS Act and has been a leading voice in increasing funding for tech hubs. Indiana companies and universities have applied for multiple CHIPS Act grants, with the goal of winning awards not only for chip manufacturing but also for research and development.
Some economists say the Biden administration’s goals to turn advanced chip factories may be overly ambitious. It took decades for Silicon Valley and the Boston tech corridor to develop. Those regions succeed because of their strong academic research universities, large anchor companies, skilled workers and investors.
Many other places don’t have that combination of assets. Indiana has for decades faced a brain drain with some of its better-educated young people flocking to big cities for work, according to the Indiana Chamber of Commerce. Some industrial policy advocates see the investments as a way to reverse that exodus, as well as a broader trend toward deindustrialization that is hollowing out communities in the Rust Belt.
But it’s unclear whether the program will achieve such ambitious goals — or whether the Biden administration will judge it to be more effective in spreading investments across the country or concentrating them in a few key hubs.
“A lot of pieces have to come together,” said Mark Muro, a senior fellow at the Brookings Institution. He added that the federal government’s plan to initially put $500 million into tech hubs was too small and estimated that $100 billion in government aid would be needed to create 10 sustainable tech hubs.
Indiana has some advantages. The state has ample land and water — necessary for large chip factories that use water to cool equipment and rinse silicon wafers — and it has relatively stable weather for the highly sensitive production process. It also has Purdue University, which has an engineering school that promises to produce the technicians and researchers needed for chip manufacturing.
But the state faces stiff competition. In January 2022, Indiana lost a bidding war in Ohio over plans by Intel, the big US chip-maker, to build two factories worth $20 billion.
“We learned a lot of lessons,” said Mr. Chambers about failure. The biggest, he said, is to have a more attractive package of land, infrastructure and workforce programs that the big chip companies are willing to offer.
A year later, Indiana won a $1.8 billion investment from SkyWater, a Minneapolis-based chip maker, to build a 750-job factory adjacent to Purdue’s campus.
State leaders acknowledge that any technological change could take years, especially without the anchor plants of larger chipmakers like TSMC, the world’s largest maker of cutting-edge chips.
Mr. Young said he and other state leaders were in talks with the big chip makers for a contract comparable to the $20 billion Intel made in Ohio. But “all new job creation in my lifetime has been created by new companies and young companies,” he said.
Indiana’s chip manufacturing is now centered in a tech park, LEAP Innovation District, in the town of Lebanon near Interstate 65, which connects Indianapolis and Purdue in West Lafayette. The town is surrounded by 15 square miles of corn and bean farms.
The park began to take shape with the CHIPS Act. In 2019, Mr. Young was a co-author of the Endless Frontier Act with Senator Chuck Schumer, a Democrat of New York and then the Senate minority leader. The bill was the precursor to the CHIPS Act.
At the end of the bill in Congress, Mr. Young was in regular contact with Eric Holcomb, governor of Indiana, and Mitch Daniels, then president of Purdue, on the details of the proposal. Mr. Young said Indiana’s manufacturing roots will be its asset, if the state’s factory sector can shift to making advanced chips.
“I realize that Indiana and, more broadly, the heartland stands to benefit disproportionately from the investments we’re going to make,” he said in an interview last month.
Then Mr. Holcomb and Mr. Chambers of a plan for a tech manufacturing park. Within months, they began buying corn and bean farms in Lebanon for what became the LEAP Innovation District.
In May 2022, Mr. Holcomb released LEAP and began installing new water and power lines and a new road there. Mr. Holcomb, Mr. Chambers and Mr. Young also traveled to more than a dozen countries to meet with executives of chip companies such as SK Hynix and TSMC. They offered the LEAP district low rent, tax incentives, access to labs and researchers at Purdue, and training programs at the local Ivy Tech Community College.
Some of the work paid off. When Indiana beat out four other states for SkyWater’s $1.8 billion chip facility, the company said it was impressed with the coordination between state leaders and Purdue’s new president, Mung Chiang, who launched the first semiconductor-level program in the country to groom workers for chip makers.
In September, Mr. Chiang invited Ms. Raimondo and Secretary of State Antony J. Blinken to tour Purdue’s clean rooms for chip research and to see plans for a $100 million expansion of semiconductor research and development, including 50 new faculty to work in advanced chip science.
“I think you have all the ingredients,” said Ms. Raimondo in a discussion with Mr. Holcomb and Mr. Chiang during the visit.
Indiana officials are now awaiting word on how much CHIPS Act funding they might get. Some early results from the district’s LEAP initiative offer a mixed picture of where things may be headed.
In May 2022, the park landed its first tenant — Eli Lillythe pharmaceutical company, not a chip maker.