Listen to this article 8 min
With plans for a new $1.8-billion semiconductor facility within the next five years, Wichita is poised to be at the forefront of efforts to strengthen the domestic supply chain and improve national security.
Wichita-based Integra Technologies, which assembles and tests computer chips, plans to expand its output capacity and sustain production within the U.S. with a new smart manufacturing facility spanning 1 million square feet at a yet-to-be-announced site within the Wichita region. The project is expected to create nearly 2,000 jobs.
It's considered the second-largest investment in Kansas history behind Panasonic's plans for a $4-billion electric battery plant in De Soto outside Kansas City.
Integra secured a $304-million incentive package for the project through the state's APEX program, paving the way for the chips manufacturer to apply this year for federal support through the CHIPS and Science Act; without it, the state can withdraw its APEX offer.
The plans come amid a major push nationally to bring the production of computer chips to the U.S.
"The banking systems today all depend on electronics. Medical devices depend on electronics. Everything in our daily lives depends on electronics," said Brett Robinson, president and CEO of Integra Technologies.
Brett Robinson, Integra Technologies president and CEO.
While the pandemic highlighted the challenges of offshore manufacturing, Robinson says it was a focus of the U.S. government even before Covid-19.
"They recognized the national security concerns of not having this chip production in the United States," he said. "Today, about 50% of all chip production is split between China and Taiwan, so any geopolitical event, even a severe weather event that limits access to that area of the world in the supply chain, is going to be devastating."
In fact, Robinson said Integra Technologies hired an architecture firm to start laying out what a new facility might look like before the coronavirus swept across the globe.
"The building grew significantly through the pandemic, because we realized that we needed to get more of this production back on shore," he said.
Ultimately, the CHIPS Act was enacted in August 2022 to provide new funding to support the domestic manufacturing of semiconductors.
"There's no commercially viable way to do this without federal funding, and that is why the CHIPS Act passed in the first place," Robinson said.
Founded in Wichita 40 years ago, Integra is considered the largest outsourced semiconductor assembly and test (OSAT) company in the U.S. An employee-owned company, Integra has a production facility at K-96 and Rock Road in northeast Wichita, along with another in Silicon Valley, employing about 250 people at each site.
Integra's experience during the Covid-19 pandemic underscores the need to produce computer chips on U.S. soil.
"In some cases, customers actually pay us to buy finished components that were made in Asia, bring them in here and we just do the testing on them," Robinson said. "Those product lines were heavily impacted by Covid. We had parts that we've been buying for decades with 4 to 6 weeks of lead time, but are now at 72 weeks in lead time."
Integra Technologies operates production facilities in Silicon Valley and in Wichita at K-96 and Rock Road, employing approximately 250 people at each site.
As for the parts Integra puts together, Robinson said the company bought a huge amount of inventory of raw materials when Covid first started to break out in China — a business decision that ended up paying off.
"Throughout Covid for what we were building, we had only a handful of late deliveries," he said.
In the U.S., chip makers are currently producing low volume but a high mix of product — which means small lot sizes with equipment that has be torn down frequently and reset to run another small batch of product.
The new Wichita facility, meanwhile, will allow for high-volume production of prototypes that are coming out Integra's Silicon Valley facility, with equipment that will run for several weeks or months.
"Today, each product type has maybe million of units that we run, and in the new factory it will be billions," Robinson said. "So once it actually matures to the point that it's ready to run that kind of volume, instead of transferring to Asia, we will transfer it to Wichita."
Key to Integra's expansion plans will be its partnership with the Workforce Alliance of South Central Kansas, as well as universities and technical colleges throughout the state, to fill the 2,000 job openings over the next five years.
Keith Lawing, president and CEO of the Workforce Alliance, said most of the new jobs will be skilled technical positions in the advanced manufacturing sector.
In the face of a severely tight labor market, Lawing said the Workforce Alliance will develop a Strategic Workforce Collaborative, a network of community organizations, local nonprofit agencies and educational institutions, in a strategy to recruit job seekers and develop the skills necessary for employment.
"We will have a ‘no wrong door’ recruitment approach to connect with job seekers and students to positions of all levels with Integra," Lawing said. "The (Workforce Alliance) will coordinate a collaborative strategy to create alignment of academic degrees and certificate programs to career pathways."
That includes a deliberate diversity, equity and inclusion strategy, Lawing added, to reduce barriers to employment and ensure access for under-represented populations.
"The goal for the Strategic Workforce Collaborative is to reach a wide range of job seekers, including historically marginalized populations, women, persons of color, unemployed, underemployed and low-wage workers, justice-involved individuals, opportunity youth, and veterans, to the high-wage and high-demand jobs being created at Integra," Lawing said.
Integra Technologies intends to create nearly 2,000 new jobs over the next five years with its new Wichita production facility, and will tap key workforce and education partners to recruit talent.
Combined, Robinson said the effort will involve nearly three dozen community partners signed up to locate employees.
"I am very confident we can find the people to fill these jobs," he said. "In parallel, we're also going to be recruiting folks into the state. Those folks will bring family members and those family members will need jobs at other Kansas companies, so I think it helps to feed the overall economy as well."
Panasonic, meanwhile, is expected to generate 4,000 direct jobs with its plant in De Soto, which is already under construction and is expected to ramp up mass production by 2025.
Asked whether the two Kansas "mega-projects" will compete for talent, Robinson said they are in different regions of the state.
"While there may be some, it's not going to be the biggest challenge, if you will," he said. "We're not going to compete for the same labor for the most part."
According to safeguards related to the APEX agreement, Integra will be required to invest at least $1.5 billion within the next five years. That includes construction of the headquarters and production facility, which will be around a two-year build, as well as delivery, installation and qualification of the manufacturing equipment, the company says.
That puts the earliest completion in 2028.
More immediately, Robinson said Integra plans to announce its site location within the next week, followed by requests for incentives from a local government body to help support the project; CHIPS funding requires both state and local buy-in.
He added that CHIPS grant applications are expected to open this month and that funding decisions from the U.S. Department of Commerce are expected in summer or early fall.
"We're just really excited about the opportunity for a truly transformational project," Robinson said. "We're going to have a lot of high-paying jobs in a cutting-edge industry that's really going to shape the global economy for the next several decades."
BY THE NUMBERS
$1.8 billion in planned capital investment
1,994 new jobs
$51,000 average wage
1 million square-foot facility
$1.5 billion required investment within 5 years
15-year minimum commitment to remain in Kansas
$304 million total incentives from Kansas