Kotek won’t designate rural land for chip industry after all as Oregon’s hopes for research hub fade

Gov. Tina Kotek dropped plans to designate rural land near Hillsboro for industrial development on Friday as Oregon’s odds of winning a federally backed semiconductor research hub before a looming statutory deadline all but vanished.

The state has been pursuing the major research site since Congress authorized the CHIPS Act in 2022 and had been eyeing 373 acres south of U.S. 26 for the project.

Political and business leaders hoped a National Semiconductor Technology Center could have cemented Oregon’s leadership role in technology research and brought nearly $1 billion in federal dollars to the state.

They sought to expand the Portland area’s urban growth boundary to make room for the facility, using special gubernatorial authority that expires at the end of 2024.

Friday’s decision is a tacit acknowledgement that Oregon’s chances of landing the site have faded and that time was running out to use Senate Bill 4, the state law that granted Kotek authority to designate rural land for the chip sector.

It’s a major defeat for Oregon’s strategy to boost the state’s semiconductor industry, one of the region’s major economic engines.

“With two of the three NSTC facilities already determined and the third not yet announced, Gov. Kotek believes that there is not a legal path forward to bring additional acreage into the Hillsboro UGB,” the governor’s office said in a written statement Friday. “The governor believes that for the long-term success of Oregon’s economy, there may be a need for more industrial land outside of existing UGBs, but the constraints of Senate Bill 4 limit her authority at this time.”

A federal research hub had been a top priority for Intel and for Oregon economic development boosters. At one time it seemed the state was a frontrunner to land one of the three projects.

“I think you will be extremely competitive,” Commerce Secretary Gina Raimondo told state leaders during a visit to Hillsboro last year.

But the first two research sites went to upstate New York and to Silicon Valley. It’s not clear that the Biden administration will designate a third site before the president’s term ends next month, or that the incoming Trump administration would stand by any decision made by its predecessor.

Intel, which had championed the CHIPS Act and Oregon’s candidacy for a research hub, has lost much of its political influence in Washington, D.C. The chipmaker replaced its CEO last month and Intel’s own future is now in doubt as sales flag and the company’s market position deteriorates.

Intel declined comment on Kotek’s decision.

Privately, government and business insiders have said that they felt Oregon’s chances ebbing as the Biden administration turned its focus elsewhere. Arizona, Texas and Indiana, among other states, are also bidding for the third research hub.

Kotek’s decision Friday to leave the farmland’s rural designation in place doesn’t officially end Oregon’s bid for a research hub. But if the Commerce Department suddenly took a renewed interest in Oregon, it would now have to find an alternate site or secure fresh authorization from the state Legislature.

“This is a missed opportunity – not only for the city, but for the state of Oregon – to secure our economic future,” Hillsboro Mayor Steve Callaway said in a written statement. He said the Legislature and a task force of business and political leaders have done much over the past two years to identify new industrial lands, but Callaway said Friday’s decision means there is more to do.

“These lands have never been more ready to meet the needs of industry as they are today,” Callaway said. “However, in order to realize and seize these opportunities, we are still left needing action from the state.”

For land conservationists, though, Friday’s decision represents a major victory. Various organizations, led by 1000 Friends of Oregon, had campaigned boisterously for Kotek to leave the 373 acres to farmers.

Duncan Wyse, who helped author Oregon’s plan to boost its semiconductor industry as head of the Oregon Business Council, acknowledged Friday that he’s disappointed by the governor’s decision.

“What’s important is, I think, she’s indicated there is a significant need for industrial land and that’s where we’re going to put our focus now,” Wyse said.

Oregon still lacks developable land for its economic future, he said, and so Kotek and other political leaders should identify and prepare land for the chip industry, clean tech and other growing sectors.

“Her decision, I hope, will galvanize the Legislature to say we really need to take a hard look at this,” Wyse said.