California may have Silicon Valley, but when it comes to making the chips that power today's technology, Texas is making a strong case for being the nation's semiconductor capital.
The Lone Star State already leads the country in semiconductor exports, and thanks to billions of dollars in state and federal incentives, the industry is growing at a remarkable pace. New manufacturing plants, research facilities and data centers are popping up across Texas, bringing thousands of jobs with them.
For people in the business, the pace of expansion is hard to ignore.
"It seems unprecedented relative to what I have seen since I got into the business in 1998," said Steve Putna, director of Texas A&M University's Semiconductor Institute. "I think this ecosystem has been significantly replenished as a result of all the incentive funding we've seen."
The latest wave of growth includes Texas Instruments' $40 billion semiconductor campus in Sherman, which began operating late last year. Nvidia and Winstrom Corporation have announced plans for facilities in north Fort Worth, while Elon Musk has proposed a massive semiconductor "Terafab" in Grimes County.
According to the Semiconductor Industry Association, Texas is now home to 57 semiconductor facilities employing more than 47,000 people in manufacturing, research, development and materials production.
A big reason for the industry's growth is government investment.
Congress approved the CHIPS and Science Act in 2022, putting $52 billion toward boosting semiconductor manufacturing in the United States after pandemic-era chip shortages exposed the country's dependence on overseas production.
Texas followed with its own Texas CHIPS Act in 2023, committing $1.5 billion to semiconductor manufacturing, research and workforce development.
One of the law's biggest pieces was the creation of the Texas Semiconductor Innovation Fund, which helps companies build or expand chip manufacturing operations in the state.
The fund has since grown to nearly $950 million after lawmakers approved another $250 million last year.
According to Gov. Greg Abbott's office, the fund has awarded more than $512 million to 29 projects, helping generate roughly $9.3 billion in private investment and creating nearly 2,700 direct jobs.
Earlier this month, Abbott announced another grant — $33.6 million for Texas Instruments to expand its Richardson wafer fabrication facility.
"Texas is where the integrated circuit was born and where the future is forged," Abbott said, referring to Texas Instruments' invention of the integrated circuit in 1958.
The state's investment isn't just going toward factories.
Texas A&M broke ground this spring on a $226 million semiconductor research facility in Bryan. The University of Texas at Austin also received $440 million to build its own research center.
Neither facility is intended to manufacture chips for sale. Instead, they'll focus on testing new technologies and training the next generation of engineers and technicians.
Putna said the universities are working directly with semiconductor companies to make sure students leave school with the skills employers actually need.
The industry's rapid growth is also tied to national security.
For decades, much of the world's semiconductor manufacturing shifted overseas, especially to Taiwan and South Korea. Today, the United States produces only about 10% of the world's chips, down from roughly 40% years ago.
That became a major concern during the COVID-19 pandemic, when global supply chain problems created shortages that affected everything from cars to electronics.
"That supply chain and the vulnerability of the Indo-Pacific to a potential military conflict and what impact that would have on our economy and national security is what got my got my attention," said U.S. Sen. John Cornyn, who helped negotiate the federal CHIPS and Science Act.
"We're just a good place to do business in Texas, and we make it easier, not harder. And I think that's been another reason why we've been a leader in this industry."
Cornyn said both federal and state investments have helped Texas attract many of the projects announced over the past two years.
Looking ahead, industry leaders don't see demand slowing anytime soon.
Artificial intelligence has dramatically increased the need for advanced chips, while Texas continues to attract more data centers, each packed with servers that rely on semiconductors to operate.
"The demand curb is not abating," Putna said. "That's always a risk, that you overbuild and demand drops. Some of the (stock) prices of these companies just seem ridiculous, but the end demand is so strong you can actually justify it."
Cornyn said he doesn't expect another round of major federal subsidies given the nation's debt, but he believes the industry's momentum will continue.
