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Cuomo puts his chips down: Making sense of a costly new deal to build a microchip factory near Utica


While Gov. Cuomo celebrates, forgive New Yorkers their skepticism about yet another heavily state-subsidized economic development deal for upstate New York.

North Carolina-based silicon carbide chip manufacturer Cree will get $500 million in state aid to build a new $1.5 billion plant near Utica. With it comes 614 promised jobs and the chance at leadership in a 21st-century industry for a region hungry, if not starving, for that kind of economic action.

Combine that half-billion with prior state investments at the plant’s proposed site, and it’s costing New York nearly $1 million for each and every job to be created. That’s a helluva lot.

New York’s recent past is littered with the carcasses of failed upstate economic development projects. LED lightbulb company Soraa abandoned a $90 million state-funded factory after it was built. A federal bid-rigging scandal poisoned Cuomo’s Buffalo Billion program. A $750 million state investment in Solar City’s Buffalo plant is faltering.

And back in 2016, Austrian chip manufacturer AMS AG backed out of a $650 million deal to build a $2 billion factory at the same state-owned site where Cree now plants a seed.

We like performance-based economic development deals when businesses give much more than they get, which is why we were all for Amazon coming to Queens; it promised $9 in economic benefit for every $1 in state spending.

Though the Cree deal isn’t quite in that category, it’s better than many that came before it. The state isn’t building the factory, and won’t begin delivering aid to Cree until they invest hundreds of their own millions in construction. Cree will pay $50 million penalties each year they don’t meet agreed-upon job targets.

This is a big gamble with public money, but not a reckless one.