Kansas reaches $304M incentives deal with Integra for $1.8 billion semiconductor project

By: - February 2, 2023 7:08 pm
Integra president and CEO Brett Robinson joins Gov. Laura Kelly during a news conference

Integra president and CEO Brett Robinson joins Gov. Laura Kelly during a news conference Thursday to announces plans for a $1.8 billion investment in computer chip manufacturing in Wichita. (Sherman Smith/Kansas Reflector)

TOPEKA — Kansas officials revealed a megadeal Thursday with Wichita-based Integra Technologies, which will receive $304 million in tax incentives over 10 years in exchange for a $1.8 billion investment in the manufacture of computer chips.

As part of the deal, Integra plans to add 1,994 jobs and build a million-square-foot facility in Wichita. The deal is contingent on the company securing an unspecified amount of additional tax incentives through the federal CHIPS Act.

The state employed the same legislation — Attracting Powerful Economic Expansion — that was passed last year to lure Panasonic’s $4 billion electric vehicle battery plant to De Soto.

Gov. Laura Kelly said the state was sending a message that this is a place where people can pursue a career.

“That’s essential if we want to keep our children and grandchildren in the state,” Kelly said. “And if we want to ensure that our communities and our state remain healthy and strong.”

Gov. Laura Kelly
Gov. Laura Kelly leads a meeting of the State Finance Council, where legislative leaders approved the secret incentives package behind closed doors. (Sherman Smith/Kansas Reflector)

Other officials said the Integra investment would be an economic game-changer for south-central Kansas and help bolster national security against supply chain disruptions.

Integra, which was founded in 1983, provides semiconductors for more than 100 U.S. Department of Defense projects, including air defense missiles, the F-35 aircraft and Apache helicopter. The company’s chips are also in the Mars rover, Hubble telescope, implantable defibrillators, cellphones, automobiles and gaming systems.

The company is already the nation’s largest provider of “outsourced semiconductor assembly and test” services, or OSATs.

“These plans will transform this country’s ability to provide these semiconductor services domestically,” said Brett Robinson, Integra president and CEO. “We saw the recent risks of not having chip manufacturing in the United States for national security and economy during the pandemic.”

Robinson said the company’s expansion wouldn’t be commercially viable without federal funding. The CHIPS Act, passed by Congress last year, provides $52.7 billion for the research and development of semiconductors in America, including $39 billion in manufacturing incentives.

Senate President Ty Masterson
Senate President Ty Masterson expresses enthusiasm for the Wichita-based investment. (Sherman Smith/Kansas Reflector)

Senate President Ty Masterson, an Andover Republican, said it was exciting to have a company in Wichita that was committed to expanding in Kansas. Standing alongside the governor and members of her administration at a news conference at the Statehouse, he joked about the bipartisan support behind the project.

“Honestly, when it comes to economic development, probably the only thing we disagree on is actually who’s driving the train,” Masterson said. “Because it takes enabling legislation for any of it to happen, right. But as we fight over who gets credit, I’m just excited everybody’s on it.”

House Speaker Dan Hawkins, a Wichita Republican, said the region hasn’t seen a project “this transformative” in years.

“As a lifelong resident of south-central Kansas, I couldn’t be more excited about the Integra project,” Hawkins said.

Legislative leaders met with the governor behind closed doors Thursday to approve the secret incentives package. Under the terms of the APEX bill, the deal will automatically lower the corporate income tax rate for all businesses by a half-percent, starting in July 2024. That’s on top of a half-percent tax cut that will take effect this July as a result of the Panasonic deal.

Lt. Gov. David Toland
Lt. Gov. David Toland, front, says the APEX legislation is one of the nation’s most aggressive economic development tools. (Sherman Smith/Kansas Reflector)

Lt. Gov. David Toland, who serves as Commerce secretary, described the legislation as “one of the nation’s most aggressive economic development tools.”

“We want it to be known far and wide that Kansas is committed to building a robust semiconductor ecosystem right here in the middle of our country,” Toland said.

Paul Hughes, deputy secretary for business development at the Department of Commerce, told lawmakers in January that the state was pursuing megadeals with two semiconductor manufacturers. In an interview after Thursday’s news conference, he said the other project involves EMP Shield in Burlington, and that that project is still in the works.

The deal with Integra requires the company to invest at least $1.5 billion within five years and have at least 1,600 full-time employees every year for 10 years, or the company will have to repay all of the state’s incentives. The company has until Oct. 1 to secure CHIPS funding.

The $304 million in incentives include a 10-year 10% capital investment tax credit, an 8.5% payroll reimbursement for 10 years, $25 million for employee training over five years, $1 million per year for employee relocation for 10 years, and a sales tax exemption for construction materials and equipment for five years.

“It’s not only a game changer for our economy, it’s a game changer for our future,” said Wichita Mayor Brandon Whipple. “This is one of the types of intergenerational opportunities where my kids, when I worked in technology, they want to make computer chips, they don’t have to move to a coastal city. They can do it right here in Wichita. And that’s huge.”

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Sherman Smith
Sherman Smith

Sherman Smith is the 2021 and 2022 Kansas Press Association’s journalist of the year. He has written award-winning news stories about the instability of the Kansas foster care system, misconduct by government officials, sexual abuse, technology, education, and the Legislature. He previously spent 16 years at the Topeka Capital-Journal. He is a lifelong Kansan.