Why did Cree ditch a chip plant in NC in favor of NY? Incentives, says CEO

DURHAM – The Triangle just lost out on a sizable chunk of Cree’s $1 billion planned expansion project.

Cree’s CEO Gregg Lowe said the Durham-based tech firm had originally planned to invest all the funds in Durham when it announced the project this May, building a “megafactory” that included a new chip plant alongside a materials factory.

But in a sudden turnaround, the semiconductor and LED firm has decided to ditch plans for the chip factory in the Bull City. Instead, it will build it in Marcy, New York as part of its drive to increase production of silicon carbide chips.

The materials factory and around $500 million in investment, however, will still go ahead as planned in Durham.

In the end, Lowe said, it largely came down to incentives. “It was substantially important,” he told WRAL TechWire by phone on Monday afternoon, hours after the decision was announced earlier in the day.

The state of New York offered a $500 million grant, allowing Cree to build a larger facility – “around 25 percent bigger — “at a lower net cost.”

“It turned out to be a financial benefit, and a capacity benefit as well.”

Lowe added that North Carolina officials had made a counter offer to lure Cree back to the Old North State. But it didn’t even come close to what New York was offering.

“North Carolina went up to their maximum statutory numbers, which were sizably lower than [New York]. It was hard to meet that.”

There were other mitigating circumstances, including the “empty shell” building already located on the Durham site.

“We were going to move into that shell. It has some amount of issue with it in terms of turning it into a [wafer fabrication facility]. We could have done it, but we would have had to compromise some things,” Lowe said.

Forecast growth for silicon chips — 30 times over next five years

The expansion project is all part of Cree’s plans to increase production of silicon carbide chips being sold by its Wolfspeed power supply subsidiary. The goal is to ramp it up by “30 times over the next five years,” Lowe said.

A major focus of that group is electric-powered vehicles. Other points of effort include wireless technology such as emerging 5G networks.

Lowe emphasized that Cree is still heavilty invested in North Carolina.

The “empty shell” site in Durham will now be transformed into a second material factory.

The firm will also add around 200-300 jobs “higher-paying jobs.” The jobs will pay “twice as much” – from $15 an hour to around $30 an hour, he said.

Will people working in the current chip factory lose their jobs?

“We’ll see a transition from operator jobs to more technicians. There will be less operator jobs,” he said.

He tried to put a silver lining on it.

“We’re really excited about the investment we’re making in North Carolina,” he said.

“We’ve already engaged on the jobs training and the workforce development side of it. We’ve been in RTP for 30 years, and we’re excited about continuing our work with them.”