Motorola Puts `Silicon Dominion' Plant on Hold: Economy Dries Chip Demand

By Cleary, Mike | The Washington Times (Washington, DC), September 17, 1998 | Go to article overview

Motorola Puts `Silicon Dominion' Plant on Hold: Economy Dries Chip Demand


Cleary, Mike, The Washington Times (Washington, DC)


Motorola Inc. yesterday stopped construction of its $3 billion computer chip-making plant near Richmond, the victim of a market collapse that started in the Asian economic crisis.

Company officials and analysts said that the worldwide demand for chips is dropping, driving down prices, because of the economic crises in Asia and Russia.

Officials of the Schaumburg, Ill.-based electronics giant said they still plan to eventually build the 1.5-million-square-foot plant, which is expected to advance chip-making technology and cut costs.

But construction at the West Creek Business Park, about a dozen miles west of Richmond, was postponed indefinitely because global economic conditions made it too costly to go ahead now, the company said.

"As soon as the market resumes, then we have every intention of getting back to the construction and selling chips," said Motorola spokesman Scott Stevens.

"While the news of Motorola's decision to suspend construction of its Goochland plant is disappointing, we are certainly encouraged by the company's long-term commitment to build the facility," said Gov. James S. Gilmore III in a press statement. "We remain committed to working with Motorola to advance Virginia's status as a technology leader."

The plant was a key prize in former Gov. George Allen's campaign to turn Virginia's "Old Dominion" based on coal and tobacco, into a "Silicon Dominion" based on high-tech industries. However, development experts have mixed opinions on whether Virginia offered excessively generous incentives to encourage chip makers to build or relocate factories in the state.

"I thought it was too high a price to pay at the time," said Charles McMillion, chief economist for MBG Information Systems in the District. "On the other hand, Virginia needed some trophy investments to leverage other investments and it's done a tremendous job in building the PR buzz in attracting other development."

Businesses and residents in and around Goochland County have looked forward to the 5,000 jobs the plant would bring, the spending it would generate and hundreds of millions of dollars of expected tax revenues. Over 20 years, the plant would generate about $564 million in tax revenues, Virginia economic development officials estimated.

The decision follows recent announcements by three Japanese chip makers - Matsushita Electric Industrial Co. …

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