Manufacturing Momentum: Top U.S. States for Industrial Investment and California’s Strategic Role
Executive Summary
U.S. manufacturing is experiencing a revival powered by federal incentives (e.g. the CHIPS and Science Act, Inflation Reduction Act) and the reshoring of strategic industries. From 2023–2025, unprecedented sums have been announced for semiconductors, electric vehicles (EVs), batteries, and other high-tech sectors. For example, by late 2024, announced semiconductor projects totaled ~$367.9 billion and EV/battery projects ~$84 billion. Top states have jumped into this boom: Texas and Arizona now lead in chip-fab projects, Michigan and Ohio in automotive/EV, Georgia in EVs and batteries, and Washington/California in aerospace and life sciences., California – long a technology hub – is pushing to stay competitive through innovation and workforce initiatives, even as other states poach investment with aggressive tax incentives and grants. This GeoIntelligence Briefing examines 2023–2025 trends in industrial investment across sectors, compares key states (CA, TX, AZ, OH, GA, MI, etc.), and discusses implications for site selectors and policymakers.
Top Story
Headline: States Jostle for U.S. Manufacturing Boom Under CHIPS, IRA, and Reshoring Push.
Why It Matters: The distribution of new factories will shape regional economies, supply-chain resilience, and U.S.-China strategic competition. Manufacturing jobs pay 40–60% above the national average, so attracting plants drives wealth and political clout. Emerging clusters – from semiconductors to EV batteries – also have national-security implications (e.g., domestic chips for defense) and climate impacts (clean energy manufacturing). Which states capture these industries depends on federal policy timing and state competitiveness. The CHIPS Act (2022) and IRA (2022) aim to rebuild U.S. capacity: the CHIPS Act alone authorizes $53 billion and by mid-2024, had sparked $30 billion in new semiconductor projects across 15 states. Site selectors now view U.S. industrial policy as a game-changer – the Site Selection Group notes that CHIPS and IRA “have made the U.S. even more appealing to foreign investors” in semiconductors and clean energy.
Key Developments:
- Semiconductors: Texas is #1 in chip fabs (top destination for CHIPS funds) and signed its own Texas CHIPS Act (2023). Arizona rose to #2 for semis in 2022, propelled by Intel and Taiwan Semiconductor (TSMC) projects. Washington (MSP) and Oregon also host major fabs and foundries. California has been slower to land cutting-edge fabs but won CHIPS support for a giant Bosch silicon-carbide plant (Roseville, $1.9B) expected to create ~1,700 jobs. In total, announced U.S. semi projects could supply ~20% of global leading-edge chips by 2030.the
- Electric Vehicles & Batteries: Private investment in U.S. EV and battery manufacturing has surged to $208.8 billion (2000–Sept. 2024), with 240,000 jobs tied to announced projects. Since the IRA’s passage, 63% of EV manufacturing jobs were announced (more than 160,000 jobs from $157 billion of investments). Key EV plants include GM and Honda in Ohio/Michigan (with new battery plants), Ford’s BlueOval City in Tennessee/Kentucky, Rivian in Illinois/Georgia, and Tesla (Fremont, CA and Austin, TX). Georgia has emerged as an EV hub – it touts $27.3B in e-mobility investments announced since 2018, including Kia’s new EV SUV line and a $7.6B Hyundai-Kia EV/battery mega-plant. The Southeast, Midwest (MI/OH/IN), and Texas all compete as EV battery and component clusters.
- Aerospace & Defense: Washington State remains the top aerospace center (Boeing, submarine maker), while California and Texas are top-five states in the category . Arizona (Raytheon, Boeing), Florida, Alabama, and New York also have significant aerospace manufacturing. These states benefit from defense contracts and big R&D budgets. For example, Alabama (Huntsville) and Georgia (Marietta) have strong defense workforces.
- Life Sciences/Biotech: Massachusetts leads this sector; California is second. California has the nation’s largest concentration of biotech and biomedical jobs (top in medtech/devices. The Golden State also leads in high-tech R&D and startup creation. Other biotech clusters include North Carolina (Research Triangle), Pennsylvania, Maryland, and New York.
- Energy & Robotics (Advanced Manufacturing): Energy storage and renewable manufacturing are growing. Battery materials (cathode, anode) plants, solar module fabs, and wind-turbine factories have been announced in TX, GA, MI, and elsewhere. Robotics and automation firms (e.g. in MA, MI, CA) support all these sectors. While no single state dominates robotics, industry 4.0 trends are spurring investments in factory automation nationwide.
Implications: The geographic shift means policymakers' focus has pivoted to industrial development. States are tailoring incentive packages (tax credits, grants, workforce training) to align with federal goals. Site selectors now weigh not just traditional costs but strategic factors: supply-chain security, talent pipelines (union vs non-union labor), regulatory climate, and proximity to markets. For example, Site Selection Group notes skilled workforce and federal policy support top FDI decisions. Companies also hedge geopolitical risk: rising U.S.–China tensions drive “reshoring” to diversify away from Asia. The result is a more active, competitive landscape: no state can take its industries for granted, and even high-cost California is racing to innovate in “green” and tech manufacturing to keep pace.
Situation Map: Leading States and Clusters
Key states and regional clusters are emerging across sectors:
- Pacific Coast & Pacific NW: Washington (Seattle/Spokane) and Oregon (Portland) dominate aerospace and high-tech semiconductors. California retains strength in semiconductor design and legacy electronics (Bay Area, Silicon Valley), plus leading life-sciences hubs (San Francisco/San Diego). Tesla’s Fremont EV plant and SpaceX's semiconductor R&D in Texas (see below) also tie into California’s tech base.
- Mountain West & Southwest: Arizona (Phoenix area) is now a semiconductor powerhouse (Intel fabs, first TSMC fab) and has a growing EV/PV supply chain. New Mexico and Utah also draw data centers and renewable projects. Texas is the no.1 state for chips (recent CHIPS awards, Samsung/Nvidia) and is investing heavily in EV-related manufacturing (e.g., Samsung’s battery line) and aerospace (SpaceX, Boeing). Texas Tech Corridor (Dallas/Austin/Houston) and the Gulf Coast petrochemical belt (Houston) form clusters for electronics, batteries, and hydrogen.
- South & Southeast: Georgia (Atlanta/Brunswick) brands itself as the “capital of EV manufacturing”, anchoring Kia’s new EV SUVs, a Rivian plant, and the Hyundai-Benz battery mega-plant. Tennessee/Kentucky center on auto assembly and EV battery plants (Ford, Volkswagen, GM). South Carolina, North Carolina, and Alabama attract Boeing, Airbus, and auto (BMW, Mercedes), plus supplier networks. Florida’s ports and logistics infrastructure are key for offshore wind and aerospace.
- Midwest: Michigan leads auto/EV (GM, Ford, Stellantis) and now batteries (Ultium, SK). Ohio hosts massive auto plants (GM, Honda, Jeep) and incoming semiconductor fabs (Intel). Indiana and Illinois have auto parts and EV final assembly (Toyota, Rivian in IL). Wisconsin and Iowa have food/agro clusters (manufacturing LQs>1) with emerging machinery exports.
- Northeast & Mid-Atlantic: Massachusetts and New York drive biotech and pharma manufacturing, as well as aerospace (Massachusetts has robotics firms). Pennsylvania and New Jersey mix chemicals, pharmaceuticals, and semiconductor fabs (e.g. Intel in PA). Delaware has battery and microelectronics firms. The mid-Atlantic (VA, MD) hosts data centers and shipbuilding.
Overall, the heat-map of investment projects (see figure) shows pockets of new plants around major metros and transport hubs. States like Texas, Arizona, Ohio, Georgia, and Michigan repeatedly appear at the top of site-selection rankings across sectors , though California remains a leader in aggregate R&D and emerging industries. Clustering means synergy: e.g., Detroit’s auto suppliers now pivot to batteries, while Phoenix (Intel) and Austin (NXP, Samsung) reinforce a Southwestern semiconductor corridor.
Strategic Signals
Scenario Watch
| Scenario | Trigger/Assumption | Potential Outcome (by 2030) |
|---|---|---|
| Optimistic “Supercharged” | Full implementation of CHIPS/IRA; robust demand for EVs/tech; continued US–China competition. | U.S. doubles down on advanced manufacturing. States with proactive incentives (TX, AZ, GA) capture major projects. Domestic semis and EV output grow well above current forecasts (e.g. >1,200 GWh battery capacitycsis.org). Workforce shortages ease via training programs. |
| Steady-Growth “Normalization” | Federal funding materializes but delays occur (supply-chain bottlenecks, inflation). Global economy grows modestly. | Most announced projects proceed but at a slower pace. U.S. share of global semiconductor and EV markets expands moderately. States maintain a gradual improvement; California remains strong in R&D and tech manufacturing, even as some manufacturing moves to lower-cost states. |
| Headwinds “Supply Crisis” | Geopolitical crisis (e.g. major China conflict) or severe recession; critical resource shortages. | Many projects stall or cancel. Companies ration investment to core facilities. U.S.–China decoupling intensifies; states scramble for remaining projects. Supply-chain disruptions (e.g. for rare materials) drive urgent government action. Possibly higher tariffs or export bans reshape which industries stay domestic. |
Actionable Insights
- For Site Selectors & Corporates: Build in policy intelligence – factor federal incentives and state packages into location models. For example, evaluate CHIPS/IRA subsidies when comparing sites. Diversify site selection across regions to hedge geopolitical risk (e.g., consider additional U.S. sites if depending on Asia). Engage with state economic offices early: Texas and Georgia have robust incentives for chips/EVs, while states like Ohio and Michigan offer skilled auto labor pools. Prioritize proximity to R&D clusters and supply networks (e.g., semiconductor fabs near materials suppliers, or EV plants near battery metal sources).
- For Economic Developers: Emphasize workforce readiness and stability. California’s “Jobs First” blueprint exemplifies tying training to growth sectors. Develop targeted apprenticeship and reskilling programs (especially in advanced manufacturing), as skilled labor is the top FDI factor. Streamline permitting/infrastructure: improve power and water access for new plants, as high energy costs can deter investment. Advocate for complementary policies (e.g. state R&D tax credits for semis, local grants for battery plants).
- For Policymakers: Coordinate federal and state efforts to maximize synergies. Ensure CHIPS/IRA disbursements proceed swiftly to keep momentum. Monitor for unintended gaps (e.g. clean energy rules or tax changes that might penalize manufacturing). Facilitate “cluster development” – for instance, connecting EV projects with training programs and supply-chain grants. Finally, maintain competitive business climates: as Business Facilities notes, incentives and economic planning “change the game” for state growth.
- Cross-cutting: Leverage data and metrics. Track investment flows, job announcements, and site-selection rankings (e.g., Site Selection Group’s annual state rankings). Use intelligence platforms (like the EV Hub or semicon maps) to spot gaps or opportunities in regional supply chains.