Broomfield CHIPS Zone approved

DENVER — Broomfield will become the third city in Colorado with designated CHIPS Zones, allowing companies in microchip-related industries to access special tax benefits if they open up shop or expand in certain parts of town. 

The Colorado Economic Development Commission approved Broomfield’s application for the zone, paving the way for the city to join Longmont and Fort Collins as the Colorado municipalities with the CHIPS designation.

Functioning similarly to Enterprise Zones, which provide tax incentives for companies operating in economically distressed areas, the concept for Colorado’s CHIPS Zones was developed on the heels of the $280 billion Creating Helpful Incentives for Producing Semiconductors and Science Act, also known as the CHIPS and Science Act or simply the CHIPS Act. That bill, signed into law in 2022 by President Joe Biden, provides support for strengthening the nation’s position in semiconductor research, development and manufacturing.

The CHIPS Zone designation is expected to be used “as a tool for some retention and attraction efforts” by Broomfield economic-development leaders, the city’s eco-devo manager Jeff Schreier said. Microchips are “one of the industries that we really want to nurture.”

The three areas where Broomfield plans to establish CHIPS Zones are:

• Area 1: Includes portions of Interlocken, Arista and the Simms Technology Park development.
• Area 2: Includes the current buildings located at 13699 and 13601 Via Varra.
• Area 3: A swath of northeastern Broomfield properties that includes properties in and around the Baseline, Palisade Park and Connect25 developments. 

“One of the main things we want to see with these CHIIPS Zones is semiconductor operations already occurring in the area,” OEDIT semiconductor industry manager Dan Salvetti said. In Broomfield, “we really see very few if any (existing semiconductor companies) within the zone, but there are a couple companies that may be working in this sphere” — Quantinuum LLC, for example. “They are a quantum company, but they do also use ion traps, which is a type of semiconductor device.”

But even without an existing critical mass of semiconductor firms, the “zoning and industrial density within these areas is attractive” for companies in the sector to consider for new operations, Salvetti said.

The planned Broomfield CHIPS Zones “include several industrial and technology parks, warehousing, large corporate offices, all of which are types of infrastructure that could potentially see semiconductor operations in the near term,” he said. “And the areas include companies working in quantum, aerospace and communications, which are all high-tech sectors that are enabled by semiconductors. So it makes sense for a semiconductor operation to co-locate in such a region.”

Semiconductors are used in every electronic device, from cars to cell phones, military hardware to medical devices, computers to clean-tech equipment.

The Semiconductor Industry Association estimated prior to the passage of the CHIPS Act that the U.S. share of global semiconductor manufacturing capacity has dropped from 37% in 1990 to 12% in 2022. Much of the capacity resides in east Asia, including China and Taiwan.

U.S. Department of Defense officials long have argued for increasing U.S. semiconductor-manufacturing capabilities for national-security reasons. Semiconductors are used in all major U.S. defense systems, and foreign production raises concerns not only about supply chains but also about potential “backdoors” that can be inserted into chips, allowing them to be reprogrammed or shut off.

Additionally, the COVID-19 pandemic and resulting supply-chain disruptions prompted government and private-sector companies to rethink the “just-in-time” global supply-chain model, whereby goods arrive from suppliers only when needed.

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