NeoCity touts its advanced semiconductor efforts as the future of Osceola County’s economy and part of the push for technological advancement across the U.S. But after a string of recent accomplishments, it’s clearer than ever that the project’s promise is still years from being realized.

Since late 2022, NeoCity — a collection of multiple, fledgling tech firms — has laid claim to an impressive half-billion dollars in federal funding. It’s created nearly 100 jobs and is on pace for 200+ within its first five years of operation. Still, a full-scale chip manufacturing effort, and the thousands or even tens of thousands of jobs that would bring, is not yet on the horizon.

“Building a new industry cluster takes a long time and we’re really thrilled with the last year and half with all these investments,” said Tim Giuliani, CEO of the Orlando Economic Partnership. “There’s always a risk of failure but … as this much money is being poured into one location from a variety of sources your chances of success just continue to go up.”

The idea to bring a semiconductor manufacturing hub to Osceola County began roughly a decade ago when the Economic Development Commission, predecessor to the Orlando Economic Partnership, made the proposal to create a tech hub here similar to those in Silicon Valley and Austin, Texas. Semiconductors were at the core of those thriving regions.

Beginning in mid-2022, NeoCity has received $50.8 million from the Biden administration’s American Rescue Plan, $120 million from the Department of Defense, $15 million from the National Science Foundation and more. All told, the investment amounts to over $500 million, Giuliani said.

But the semiconductor industry is difficult and previously announced plans to begin an initial phase of manufacturing in late 2023 or early 2024 have been delayed.

Manufacturing has yet to start at NeoCity largely due to its complexity and high cost, said John Allgair, interim CEO of BRIDG, one of the founding companies at NeoCity.

“We’re standing up the capability and validating its manufacturing performance now,” Allgair said. “But one of the things that can control your rate at which you do something like this is how quickly you buy equipment and how quickly you build out your fab. That side of the equation has perhaps been a little more challenging for this project.”

NeoCity eventually will produce products that help enable 6G, supercomputing, autonomous vehicles, advanced small satellites and more. But Allgair said some of its individual projects still need more funding, while some are working with technology so advanced they are still in the research and design phase.

NeoCity hopes to speed still other efforts along by focusing on technology that isn’t cutting-edge. By taking components that are designed elsewhere and purchasing equipment that’s already in use, it can spend less to build faster, Allgair said.

“The factory that we’re doing doesn’t cost as much and that’s enabling us to get to where we are today. If you want to build a truly state-of-the-art factory that is going to make the latest processor from Intel or the latest processor for Apple that factory, you’re probably $10 billion in at minimum to start it and you’re about a billion dollars a month to run it,” he said.

Stoking a domestic chip-making industry is a new endeavor for the U.S. government, Allgair said, but it’s critical to decrease our dependence on overseas manufacturers. That said, it’s tremendously expensive — more perhaps than the champions of the 2022 CHIPS and Science Act understood.

Although NeoCity has secured hundreds of millions in funding, it’s not enough, said Stacy Rasgon, managing director and senior analyst of semiconductors at Bernstein Research.

“The entire U.S.-based semiconductor industry allocated over five years… is roughly $75 billion, but Taiwan Semiconductor Manufacturing Company by themselves spend $30 billion plus a year,” Rasgon said.

In addition to the financial challenges, the chip industry is very cyclical and is currently in a down cycle.

The push to bolster domestic semiconductor manufacturing came after supply-chain issues during the COVID-19 pandemic created a crippling but artificial chip shortage, Rasgon said.

“Ultimately what’s going to determine how much capacity gets built is not politics but demand and we’re actually seeing that now that a lot of projects are getting put on hold because there’s a downturn,” Rasgon said. “During COVID we saw the chip shortage…and what happened is you see all this demand so you build capacity to support the demand but it turns out the demand wasn’t real.”

NeoCity’s commitment to Osceola County may still be a significant factor in diversifying the local economy but it will take decades, Giuliani acknowledged.

“Early on there’s a lot of  government investment and it builds capabilities, it sets up facilities, infrastructure, tools, gets workforce development and education programs online,” Giuliani said. “What ends up happening through that government investment is you increase your value proposition to private industry. So we’ll see this evolution over the next 10 years from public sector investment to private sector investment.”

One potential drag on NeoCity’s progress is its unique placement. Around the world, other semiconductor manufacturers are located in areas where there is already a workforce, Rasgon said.

To build a workforce in the Orlando area, Valencia College has created multiple certificate programs for semiconductors and the University of Central Florida has dedicated a semiconductor program for undergraduates and graduates. Both programs have interns already working at NeoCity, said Dale Miller, vice president and general manager of SkyWater Florida, another partner company at NeoCity.

Today, NeoCity overall employs roughly 90 people across its nearly 500-acre campus, Miller said.

But there’s also an advantage to NeoCity’s location. In Osceola County, where the median household income is roughly $64,000, one of the lowest in Central Florida, work at NeoCity will be among the highest paying jobs you can get, Rasgon noted.

“Compared to unskilled labor…the jobs do pay well,” Rasgon said. “I think it should be economically beneficial to the community assuming that the factory itself is self sufficient.”

Today, Osceola County residents can apply for the roughly 20 new positions SkyWater is hiring for this year, Miller said.

“The Department of Defense award has helped us to start hiring people now and our first engineer started this week,” Miller said. “It all depends on the forecast, right, that can change. So if things slow down, say the money that the government is going to give us isn’t as much as we thought it was going to be..we will adjust based on that.

“It’s a very big program that we have to step up and are trying to do as fast as possible to bring it online.”