In downtown Sherman, Texas, markers explain the city's past and restaurants and coffee shops boast about the historic buildings they call home.
Just 10 minutes down the road, Dallas-based Texas Instruments and Taiwanese-owned silicon wafer builder GlobalWafers plan to spend a combined $35 billion on high-tech factories in the all-important semiconductor supply chain.
Founded in 1846, the city is named after a Texas Revolution hero who led one of the militias shouting the "Remember the Alamo" rallying cry. Almost two centuries later, residents still pass beneath an ancient sprawling Pecan Tree that shades the county courthouse and the former town square. They know their neighbors' names, professions and family trees. They visit shops, restaurants and expansive antique stores in the city's preserved downtown.
But there's a new lifeblood of Sherman's economy.
No longer built around railroads or mail routes or the cotton trade, it's now a high-tech town, largely bolstered by the jobs and investments provided by Texas Instruments, GlobalWafers and Apple supplier II-VI. As the city's tech sector expands, its population is growing, and new housing developments and businesses are popping up left and right.
"It's a little scary for us," said 37-year-old Sherman resident Lauren Sims. Still, she said, "It's a good scary."
Sherman, the bigger part of the 120,000-person Sherman-Denison metro area, is no stranger to change.
Its transformation into a key U.S. hub for semiconductor manufacturing is made possible by natural resources, infrastructure and savvy local leadership, but also by a business-friendly tradition dating back decades.
"It's in our DNA," said Kent Sharp, president of the Sherman Economic Development Corp., which helped land the GlobalWafers deal that will bring the first facility of its kind to the U.S. in two decades.
Semiconductors, the tiny chips that power modern computers and other electronic devices, are at the heart of city leaders' plans. The city wants to be home to companies along all steps of the supply chain, from crafting silicon wafers to creating circuit boards for consumer products.
STRIKING A DEAL
In 1990, the U.S. accounted for 37% of semiconductor production capacity. In 2020, that number dropped to 12%, according to a study by Boston Consulting Group and the Semiconductor Industry Association.
During the coronavirus pandemic, supply-chain issues in securing chips from overseas and record demand caused a shortage that persists today, prompting calls to bring more production to the U.S. The shortage has been exacerbated by continued lockdowns in China and ripple effects from the war in Ukraine.
Semiconductor supply chains are still vulnerable, and long-term demand is skyrocketing thanks to increasing digitization.
"Automobiles, vacuum cleaners, you name it, everything's running on chips these days," said Michael Savoie, professor of operations and supply-chain management at the University of North Texas' Ryan College of Business. If semiconductor production in southeast Asia is disrupted, "you could cause a global catastrophe within the supply chain."
For Taiwan-based GlobalWafers and its GlobiTech subsidiary, supply-chain issues mean high demand and an impetus to add capacity through a $5 billion expansion in Sherman.
"We and our peer competitors have been sold out, especially on advanced products (300-millimeter) where the supply will remain tight possibly through year 2024, which is the timing of new expansions," GlobiTech president Mark England said in an email.
Before semiconductors can roll off the line and into cars, consumer electronics and industrial machinery, fabrication plants start with a silicon wafer -- a large, mirrorlike sheet of ultrathin silicon that yields thousands of chips.
The new GlobalWafers plant will craft those wafers, in addition to being capable of applying a crystalline coating. GlobiTech's existing facilities will receive some of the raw wafers and apply that coating.
GlobalWafers' expansion will be a long-term investment. Samples will begin making their way to customers in the second half of 2024 and mass production -- starting at 350,000 wafers a month -- will begin in 2025.
The site could eventually ramp up to 2.4 million wafers produced a month, England said.
"It will be our expansion vehicle for the next 40 years," he said.
STIFF COMPETITION
GlobiTech and city leaders weren't certain Sherman would win the project, especially since construction costs in the U.S. are three times more expensive than overseas. Sites in Ohio and South Korea were also being considered and all three locations offered big economic incentives.
"It's like dating," England joked, with competing cities putting their best foot forward.
Winning the faceoff required collaboration between the Sherman Economic Development Corp., four local taxing bodies and state government -- as well as a promise of future federal incentives. The economic development agency was "the point of the spear," City Manager Robby Hefton said, organizing different groups during negotiations with companies like GlobiTech.
The economic development agency offered $20 million in cash payments and the sale of over $14.4 million in land for $1 an acre. The Texas Enterprise Fund contributed a $15 million grant.
The city, Grayson County and Grayson College chipped in tax incentives, and the city offered a discount on water bills. Though it needs school board approval, the company should also receive a break on taxes paid to the local school district.
While Ohio had a 100% tax abatement deal ready to go in a week, efforts in Texas took months of negotiation between taxing entities. Each Sherman negotiator could have busted the deal with just one hangup.
Luckily for the city, GlobiTech and its president have strong Sherman roots.
"We've been working with the city for over 20 years, and we know everyone," said England, a Sherman native.
Sherman had several other advantages.
GlobiTech's existing management team can oversee the new plant, which is helpful because the wafer production process involves trade secrets. The city has an ample supply of workers, land, power and other utilities, boasting some of the best water access in Texas thanks to Lake Texoma, one of the few reservoirs in the state that's at full capacity.
The GlobalWafers project will be eligible for incentives under the CHIPS Act approved in January 2021, but Congress still needs to provide $52 billion in funding for subsidies to spur domestic semiconductor investment. For GlobalWafers, that funding is essential.
Intel has said it may delay or reduce its plans to build a $20 billion chip plant in Ohio depending on what happens with the bill, and England said GlobalWafers could scale back plans in Sherman or move its new production overseas if the money doesn't come through.
"We're in the same boat with Intel," England said. "We don't feel secure about the decision until the concrete dries."
Deal makers are anxious to see the bill funded before Congress recesses in August, and city leaders have talked to elected officials about its importance. But there is debate over whether $52 billion is enough to bring more of the nearly $500 billion semiconductor industry to the U.S., thereby decreasing supply-chain vulnerability.
"With the CHIPS Act, it may be an uphill battle: Is it enough to provide $52 billion to the industry? Absolutely not. It's just a start," Bloomberg semiconductor analyst Paula Penkal said.