ABC Fox Montana: Montana on the map: State gets coveted technology hub designation; aims to grow photonics, autonomous systems sectors

Montana has been designated a regional tech hub by the Biden administration with a focus on the photonics, optics and autonomous systems industries as part of wider U.S. efforts to subsidize and grow more domestic technology firms, research and development and supply chains that are less reliant on China and other potentially adversarial foreign markets.

Proponents and participants in the new Montana hub say it has significant economic development, national security and defense components, including drones and self-driving vehicles.

Montana’s Headwaters Regional Technology and Innovation Hub is getting a $450,000 strategic development grant from the U.S. Department of Commerce and the federal designation opens the door to more potential research and development, economic and defense grants.

Montana was among 31 designations and 29 federal grants from a pool of 198 applicants nationally. The Headwaters hub will be led by the Accelerate Montana economic development group.

Other hub participants include Montana State University, the University of Montana, Bozeman-based Bridger Photonics, autonomous truck developer Aurora Innovation and state economic agencies and business groups.

America’s Frontier Fund — a technology and defense focused investment group backed by former Google CEO Eric Schmidt and PayPal founder Peter Thiel — is also part of the Headwaters hub, according to Accelerate Montana. Bozeman-based venture capital firms Next Frontier Capital and HomeStake Venture Partners are also part of the effort.

‘Unprecedented heights’

Montana officials and lawmakers welcomed the designation, which was announced Monday by federal officials saying it will have big economic development and security benefits.

MSU President Waded Cruzado said the designation bolsters the university’s R&D in a technology arena that has already “stimulated the growth of a robust photonics industry in the Gallatin Valley.”

“The technologies have wide-ranging applications from autonomous vehicles to precision agriculture,” Cruzado said. “The tech hub and Montana State University will help strengthen local economies in Montana and bolster our national security in terms of food, water and energy.”

The hub designation is part of the $280 billion CHIPS and Science Act that Congress passed last year offering federal investments and tax breaks to bolster domestic R&D, semiconductors and defense technologies aimed at making U.S. industries less beholding to Chinese and international suppliers and supply chains.

Accelerate Montana Director Paul Gladen told the Bozeman Daily Chronicle that the Headwaters hub will apply for additional federal money in February when a new funding window opens. Montana could be awarded between $40 to $70 million to fund projects and technology workforce development related to supporting existing tech companies in the photonics, optics and automation fields, and also creating new companies, Gladen said.

The Montana Photonics and Quantum Alliance and Montana Chamber of Commerce are also part of the hub.

“The designation of Montana as a technology hub is a testament to our commitment to excel on the global stage, enhancing our national defense and competitiveness and securing our technological supply chains,” said Todd O’Hair, President and CEO of the Montana Chamber of Commerce in a statement. “This has the potential to propel our region’s economy to unprecedented heights.”

Backing from Tester, Daines

Montana’s U.S. Sens. Jon Tester, a Democrat, and Steve Daines, a Republican, both backed the CHIPS Act and the Headwaters Hub effort.

In 2021, Tester sponsored an amendment to the CHIPS and Act to ensure some of the federal money for domestic technology industries would go to rural areas. “Innovation can happen in any corner of America, which is why I’ve led the push to bring a Regional Tech Hub to Montana,” Tester said in a statement.

Daines said the hub designation bolster’s Montana technology standing and that it will “help strengthen our national security and help us stay competitive against China.”

Other tech hubs designed by the U.S. government Monday includes ones related to “climate resilience” in South Florida, ocean robotics in New England, wind energy in Louisiana, pharmaceutical ingredients manufacturing in Virginia, ”cell, organ and tissue biofabrication” in New Hampshire, vaccine manufacturing in Kansas City, predictive health care in Baltimore, lithium batteries in Nevada and microfludic systems in Oregon.

The CHIPS Act effort was born out of the supply chain disruption of the COVID-19 pandemic (especially in China) and worries about U.S. industries being too reliant on foreign suppliers.

Critics and skeptics of the measure, which includes tax breaks for domestic semiconductor plants, R&D and technology equipment — question sending subsidies that will benefit large technology and semiconductor companies and whether government outlays will increase U.S. market shares on the global technology stage.

A Goldman Sachs analysis of the U.S. efforts last year said the CHIPS Act and its components are more of a “geopolitcal hedge” against future crisis and disruptions but also runs up against global technology growth.

“The CHIPS Act will help boost production, but GS Research says the current incentives in the Act will only be able to ‘fully’ support an increase in the U.S.’s market share of global chip capacity of less than 1%,” the Goldman Sachs analysis said.