A service provider in the semiconductor industry, which operates a packaging facility in Colorado Springs, has been approved for millions in tax incentives from the state if it expands its U.S. operations in Colorado.

At its regular meeting on Thursday, the Colorado Economic Development Commission approved more than $1.1 million in performance-based job growth tax incentives and $1 million in CHIPS refundable tax credits for an unnamed company referred to as Project Rey. The commission often uses code names during the competitive process to attract and retain businesses in Colorado.

The company is an integrated device manufacturer that produces high-performance analog and mixed signal products, said Dan Salvetti, semiconductor industry manager of global business development for the Colorado Office of Economic Development and International Trade.

It is considering an expansion of one of its facilities in either Colorado Springs or California, with a planned capital investment of $15 million, he said. State incentives, access to talent and a positive business environment are factors driving the company’s decision.

The parent company has nearly 2,000 employees across the world, including more than 100 currently in Colorado. Its expansion in El Paso County would create 66 jobs over eight years, including process engineers, test operators and maintenance technicians, according to meeting documents.

The average annual wage of these employees is an estimated $59,530, or 91% of the average annual wage in El Paso County.

To be eligible for Colorado’s job growth incentive tax credits, a business must pay new employees an average annual wage that is at least 100% of the average yearly salary in the county where the project will be located.

The company behind Project Rey has paid all its current employees significant bonuses each year and confirmed it will pay new employees the same bonuses in the future, Salvetti said.

A financial analysis shows that base pay is about 70% of the total pay for the employees included in the employment plan, reflecting a total compensation of about $84,000 — more than El Paso County’s average annual wage of $65,338, Salvetti said.

Because the company “represents a niche part of the semiconductor manufacturing supply chain, demonstrating that Colorado has the full spectrum of semiconductor business activities,” OEDIT staff recommended lowering the average annual wage requirement for this project.

Should it select Colorado for expansion, Salvetti told commissioners the state will annually validate that the company meets its requirements for the tax incentives, including employees’ annual salaries.

The company also expects to earn $704,600 over the next eight years in Enterprise Zone investment, new employee and job training tax credits through the upcoming Colorado Springs CHIPS Zone. Its formal designation is expected in the near-term, OEDIT spokeswoman Alissa Johnson said in an email.

Colorado legislators in 2023 created the CHIPS Zone Program to maximize incentives available for semiconductor companies in the state. Municipalities, counties and groups of both can apply to designate a geographical area within their boundaries as a CHIPS Zone, allowing them access to various state income tax credits.

Project Rey received less in refundable tax credits than the $1.8 million it asked for, in part because the company isn’t seeking federal funding. OEDIT staff recommended $1 million.

Project Rey also expects to earn enterprise credits through the Colorado Springs CHIPS Zone, Salvetti said.

Incentives for food manufacturer

The commission on Thursday also approved up to approximately $1.6 million in job growth incentive tax credits for Project Captain, a food manufacturing company that also wants to expand its U.S. operations, citing increased demand for its products.

The parent company behind Project Captain is an international business that has other divisions throughout the U.S. and globally, according to meeting materials.

It is considering Boulder County for expansion. The company is also considering Georgia, Arizona and Texas. The total cost of its expansion and the role incentives play in offsetting some of those costs are critical factors in the company’s decision, OEDIT staff said.

The project is expected to create 110 jobs over eight years, with an average yearly wage of $99,438. This is 104% of the average annual salary in Boulder County.

Jobs will include engineering, sales and supervisor professionals, according to meeting materials. The company has 408 employees currently.

This article has been updated to clarify that Project Rey’s expected earned credits through the planned Colorado Springs CHIPS Zone was not a factor in the Colorado EDC’s decision to recommend an award of $1 million in refundable tax credits.