Latest Trends in High-Technology Location Strategy

The high-technology sector is entering a new phase of capital investment, driven by rapid advances in artificial intelligence, automation (e.g., machine learning, advanced robotics, Internet of Things), semiconductors/microelectronics, biotechnology (e.g., advanced gene editing, personalized mRNA therapies, and synthetic biology), and energy intensive computing. These shifts are not only changing what companies produce. They are changing what companies need from the places where they operate.

For site selectors, corporate location decisionmakers, and economic developers the implications are significant. High-tech location strategy is increasingly becoming more about whether a region can deliver the talent, infrastructure, research assets, supply chain access, and innovation ecosystem required to support long-term growth. While business costs and incentives are important, they are seldom the main driver for today’s high-tech geographic deployment strategy.

Defining the High-Technology Sector

High-technology is not a single industry. It is a classification that cuts across multiple sectors, generally defined by advanced technology use, high concentrations of STEM talent, and significant research and development activity. In practice, the sector includes software and information technology, digital media, semiconductors and advanced electronics, aerospace and defense, scientific instruments, medical devices, biologics, pharmaceutical preparations, robotics/automation, and financial technology (fintech).

What unites these fields is a pace of innovation that continually reshapes products, processes, workforce needs, and facility requirements. That is what makes high-tech location decisions so challenging. The infrastructure, talent, and ecosystem requirements for a semiconductor fabrication facility are markedly different from those of a robotics manufacturer or pharmaceutical R&D center. Treating the sector as a single, uniform category can lead to missed opportunities on both sides of the negotiating table, company, and community.

Innovation Trends Reshaping the Sector

Several major innovation waves are converging at once and each has important implications for where high-tech companies invest, what they require from a location, and how communities compete for these projects.

Agentic AI and Physical Automation

One of the defining near-term shifts is the move from experimental generative AI to agentic systems capable of planning, reasoning, and executing complex tasks with greater autonomy. At the same time, AI is increasingly being integrated into physical systems through robotics, warehouse automation, precision manufacturing, and logistics. For location strategy, this creates demand for facilities that can support both advanced computing infrastructure and sophisticated production environments.

Next-Generation Semiconductors and Computing Architectures

The semiconductor industry is shifting toward chips optimized for AI inference, edge computing, and specialized industrial applications. Quantum computing is also moving closer to practical deployment in areas such as cryptography, materials science, and logistics optimization. These advances are intensifying capital requirements, infrastructure specifications, and domestic investment as supply chain resilience and national security move higher on the strategic priority list.

Bioengineering and Programmable Biology

Advances in biotechnology are expanding the definition of high-tech manufacturing to include biologics, pharmaceutical preparations, advanced materials, and next generation therapeutics. These industries bring distinct site selection needs, including proximity to life sciences research ecosystems, specialized laboratory infrastructure, cold chain capabilities, scientific talent, and regulatory expertise.

Sustainability and Energy Aware Computing

Across high-tech subsectors, sustainability, digital connectivity, and cybersecurity are now core operating requirements. Energy intensive operations need reliable power, renewable energy access, water resources, and resource efficiency strategies. At the same time, 5G, fiber networks, edge computing, resilient data systems, and cybersecurity expertise are becoming essential as high-tech operations grow more autonomous, interconnected, and data dependent.

Advanced Connectivity and Cybersecurity

5G, fiber optic networks, and edge computing infrastructure are becoming table stakes for high-tech operations. As systems become more autonomous and interconnected, the attack surface for cyber threats expands. This makes robust cybersecurity infrastructure, resilient data systems, and proximity to security expertise increasingly important location considerations, especially for companies managing sensitive intellectual property, regulated data, or mission-critical operations.

Impact on Site Selection and Economic Development

These innovation trends are reshaping how high-tech companies evaluate locations and what economic developers must offer to compete. Companies increasingly prioritize whether a region can support business operations and innovation through talent depth, research assets, supplier access, digital connectivity, and infrastructure reliability.

As a result, companies establishing high-tech operations are placing greater value on ecosystems when searching for new locations. An ecosystem encompasses industry peers, R&D labs (corporate, government, nonprofit), research-oriented universities, a deep bench of skillsets (from technician to production to engineering), a substantial talent pipeline (from colleges/universities), specialized suppliers, venture capital, and active business startup/incubation activity. This dynamic ecosystem is also fueling the rise of innovation districts, mixed-use business campuses, and emerging tech hubs outside the traditional technology centers.

Infrastructure expectations have risen sharply as well, especially for manufacturing. Depending on industry segment, these include electric power transmission/distribution capacity, electric power resilience, natural gas supply, alternative energy sources, water availability, process effluent discharge capacity, stability of utility costs (especially power), fiber and 5G networks, and efficient highway access. Sites must have sufficient infrastructure and be proximate to an area’s industry specific ecosystem.

Business operating costs move to the forefront once the above location imperatives have been satisfied. Frequently, companies will choose moderate cost locations, both for business and living. Incentives can also swing a final siting decision but only among areas that can readily support the essentials for successfully operating the subject business over the long term. Most influential incentives include tax credits for capital investment and job creation, property and sales tax exemptions/abatements, site infrastructure assistance, and deal closing grants. Ideally, tax credits should be refundable. Expedited permitting (state and local) is highly desirable as speed to market embraces a key requirement for most new high-tech location projects.

Key Location Considerations by Segment

Because high-tech manufacturing and research span a wide range of operational profiles, location requirements vary significantly by segment. Six categories illustrate the range of location drivers.

Semiconductor Manufacturing

Semiconductor fabrication, commonly known as “fab,” is the most infrastructure intensive category of high-tech manufacturing. Fabs operate continuously and are extremely sensitive to disruption, making utility capacity and reliability critical site selection factors. Power requirements are massive and water access is equally important because fabrication requires massive quantities of ultrapure water for wafer cleaning and processing. An illustration of a new investment in this industry is the Micron fab plant in Central New York State (see Photo A).

Wafer fab plants require at least 200MW-600MW of continuous power. Electricity accounts for 15-30 percent of annual operating expenses in wafer fab plants. Hence, cost of power is particularly important. In addition, sites must be rigorously evaluated on factors such as transmission line congestion, dedicated high-capacity substations with redundant feeds, power quality, and access to renewable energy sources.

Daily water consumption of fabrication plants can approach or exceed five million gallons. Consequently, potential sites must be thoroughly assessed on factors such as quality standards, demand redundancy, watershed stress, allocation rights, climate scenarios, and wastewater discharge capacity/regulation/permitting. Water intake and discharge costs should be reasonable.

Beyond utilities, semiconductor manufacturers need large, geologically stable sites with immediate infrastructure access, streamlined permitting, and proximity to specialized suppliers, equipment manufacturers, and end user industries. Workforce is another decisive factor, particularly access to engineers, technicians, and STEM professionals. Availability of qualified workers for production positions (such as wafer fabrication operator, semiconductor process tech, and electronic assembler) is also a prerequisite for siting new semiconductor plants. In addition to talent pool depth, both college/university talent pipeline and training programs geared toward the industry weigh prominently in choosing new locations for this industry.

With federal CHIPS Act funding now substantially committed, state and local programs have become primary financial tools. The most competitive packages combine infrastructure grants, electric power discounts, refundable tax credits, equipment and construction sales tax exemptions, real property tax abatements, and workforce training subsidies.

Biotechnology

The biotech industry leverages living organisms, cells, and molecular processes to create products/technologies that improve human health, agriculture, and the environment. Biotech differs from pharmaceutical manufacturing. Pharmaceuticals rely on chemical synthesis to produce medicines whereas biotech companies derive medicines/related products from living biological systems (often referred to as biologics).

Subsectors include Healthcare/Biopharmaceuticals (e.g., gene therapies), Agriculture (e.g., drought resistant crops), and Industrial/Environmental (e.g., bio-based enzymes, sustainable biofuels, and biodegradable plastics).

Among the most critical location criteria for biotech manufacturing are talent availability, utilities (especially water), regulatory and permitting certainty, logistics (especially air service), and business operating costs.

Biomanufacturing requires specialized skills such as process engineers, quality control specialists, and cGMP trained operators. Proximity to both other industry players, top research universities, and technical training programs are paramount in choosing new locations.

Biotech plants typically consume large quantities of water and are electric power intensive. Specific sites must have adequate infrastructure in place including high purity water supply, robust wastewater treatment, and uninterrupted power.

Locations with streamlined zoning, expedited permitting, and established Good Manufacturing Practices (cGMP) are preferred. Quality of life/cost of living are also high on the list of location factors as companies will draw a proportion of talent from outside the selected region. It is also important to be close to airports with extensive nonstop service for temperature sensitive supply chains.

Business operating costs (labor, utilities, occupancy, taxes) will be taken into account when selecting a finalist location. Likewise for incentives, especially refundable tax credits (capex and labor), site infrastructure improvement, deal closing grants, and property/sales tax abatements.

New biotech manufacturing operations often opt for locations in established or emerging industry hubs. One example is the Fujifilm cell culture manufacturing plant in the Research Triangle (NC) region (see Photo B).

Advanced Manufacturing: Robotics, Aerospace, Scientific Instruments, Medical Devices, and Related Industries

Beyond semiconductors, many high-tech manufacturing industries share a more common site selection profile, though each segment has its own nuances. These industries include robotics, aerospace, electrical equipment, medical devices, optical instruments, and pharmaceutical preparations. Illustrative of new manufacturing sites in this broad sector are the Firefly Aerospace complex (lunar landing and orbital vehicles) near Austin, TX (see Photo C).

Across these industries, workforce quality and availability are primary location drivers. Companies need access to engineers and technicians with expertise in mechatronics, software, AI integration, precision manufacturing, and regulatory compliance. Additionally, talent requirements include semi-skilled such as machine operators along with entry level labor possessing solid foundation skills. Supply chain and customer proximity also matter, particularly for companies serving automotive, defense, healthcare, or advanced industrial markets.

Infrastructure requirements are significant but generally less extreme than in semiconductor manufacturing. Reliable power, high speed connectivity, available modern industrial facilities, logistics access, proximity to both colleges/universities (two and four years), reasonable permitting timelines, competitive incentives, and visible community support round out the location profile for this broad segment.

Digital Media

This industry encompasses businesses that create, distribute, and monetize digital content (including text, video, audio, graphics, and interstate software). Digital media cuts across business sectors including e-commerce retail, media/entertainment, gaming, and travel/hospitality. The industry is undergoing massive transformation driven by technological innovation and shifting consumer habits. Momentous trends include Generative AI Integration, convergence of social media with immersive game worlds, and a shift toward unified, cross-platform experiences.

Among the most influential site selection considerations are talent/workforce expertise (e.g., digital asset management, content delivery networks, graphic design, and analytics), proximity to universities and tech hubs, population growth in the Gen Z and millennial cohorts, data security/compliance, quality of life/cost of living, availability of suitable buildings, and air service.

Fintech

This industry embodies the integration of software, mobile applications, and digital platforms. The end goal is to automate, enhance, and efficiently deliver financial services. Fintechs are typically middle aged (established last 10 years) or startups. Of course, major financial institutions also own and invest in fintech. The preeminent fintech trends involve maturation of autonomous AI agents, stable coin settlement networks, greater focus on B2B services, and pursuit of direct banking licenses. Companies are concentrating on operational profitability, scaling integrated platforms, and addressing next generation fraud.

Primary site selection factors include talent availability (engineering and financial services), state regulatory environment (e.g., testing innovative products without obtaining full licenses), and proximity to customers.

Research and Development Centers (R&D)

R&D centers operate on a different logic than manufacturing facilities. Capital infrastructure still matters, but human capital matters more. The ability to recruit and retain world class researchers, scientists, and engineers is the overriding location driver. Often access to other company operations is important. R&D operations also tend to assign extensive air service as a top priority. An example of an R&D center to take advantage of an industry ecosystem is the Smith & Nephew operation (surgical robotics) in Pittsburgh, PA (see Photo D).

Proximity to universities and research institutions is essential, both as a talent pipeline and as a foundation for collaborative discovery. Presence of other R&D entities is also high up on the list of location factors. A vibrant business startup/entrepreneur scene is also important for attracting R&D centers. Quality of life also matters because senior scientific/engineering talent often have national or even global options for employment. Strong schools, cultural amenities, walkable neighborhoods, outdoor recreation, and reasonable cost of living can all influence whether top talent can be recruited and retained. Incentives will also play a role, especially R&D tax credits (refundable are the most coveted).

Some R&D centers will also require a site that can support pilot manufacturing. For R&D/pilot manufacturing the aforementioned location factors will prevail. In addition, qualified sites will need to meet expanded criteria such as logistics, skilled labor, a robust utility infrastructure, and environmental compliance.

The Bottomline for Economic Development and Location Selection

High-Technology industries must always be at the forefront of innovation. As we enter the late 2020s the sector is at a pivotal inflation point, shifting from experimentation to AI-first delivery models that demand scaled operations, stronger governance, and measurable business impact across product/engineering/customer ecosystems. High-tech enterprises are re-architecting operational models, talent structures, and partner relationships to unlock resilience, speed, and differential value.

For communities and states to successfully compete for new high-tech investments the imperative is clear: understand the emerging operational requirements of each high-tech segment; invest in the requisite infrastructure/talent/and regulatory foundations critical for the industry’s success; and support the evolution of collaborative ecosystems where innovation can compound over time. It will be these proactive communities (and states) that will consistently be on the radar screen for companies seeking new high-tech locations.

For companies, the first order of business is to ascertain the impact that transformative trends will have on both business operating requirements and the relative importance of varied location criteria. Next examine both the company’s geographic footprint and those of competitors to ascertain whether there could be any regional opportunities or constraints in siting new facilities. Subsequently engage in a metric driven analytical approach to identify potential locations that satisfy the most prominent siting criteria. Thoroughly vet potential locations on operational, site/building, and cost dynamics. Balancing these considerations, select a location that will yield the greatest long-range operational advantages.

Among the location factors that will typically emerge as “must haves” for high-tech entities are talent pool breadth/depth, industry ecosystem, college/university presence, quality of place/cost of living, attractive ready to go sites, utility infrastructure, often an available building, and expedited permitting. Before choosing the final location business operating costs and incentives will of course factor into the equation.

About the Auther

Dennis J. Donovan is a Principal of Wadley Donovan Gutshaw Consulting, LLC, based in Bridgewater, NJ. WDGC has advised many business and financial services firms on location strategy and site selection for over four decades.