Is New York semiconductor startup Pallidus still bringing $443M HQ to Rock Hill? – Charlotte Business Journal
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New York semiconductor company Pallidus pledged to move its headquarters to Rock Hill, investing $443 million and creating 405 jobs in the process.
An under-the-radar manufacturing startup expected to move its headquarters to Rock Hill raised $30 million toward the end of last year. That’s on top of $74 million it secured in 2022.
The Albany, New York-based company, Pallidus Inc., which makes silicon carbide wafers for semiconductors, also hired the former chief financial officer of Intel Corp. as its top executive.
The fresh fundraising and leadership change followed a February 2023 announcement that the company would be relocating its corporate headquarters to Rock Hill.
The South Carolina Department of Commerce said at the time that Pallidus would be making a $443 million investment and creating 405 jobs, with operations starting “by the third quarter of 2023.” The company’s operations were set to be housed in 300,000 square feet at 1786 and 1800 Overview Drive near Waterford Golf Club.
More than a year after the announcement, CBJ sister publication the Albany Business Review could not determine the project’s status. Also unclear: the company’s current employee tally and the status of a possible expansion in New York.
Pallidus did not grant a requested interview with George Davis, who is identified on the company’s website as its interim CEO, nor address a question about the status of the Rock Hill project.
Davis was CFO for Intel (NASDAQ: INTC), a giant in the semiconductor industry, from 2019 to 2022, according to an online biography.
“Currently, our primary focus is on launching our initial product and collaborating closely with select customers,” Pallidus said in a statement to the Business Review. “Regarding further details about our business activities, we prefer not to comment publicly until we have progressed further with product qualifications.”
One potential boost — or blow — to the company’s plans could be yet-to-be-finalized rules for claiming the advanced manufacturing investment credit created through the CHIPS Act of 2022.
The company has advocated for a change to the proposed regulations that would ensure its eligibility for the potentially valuable credit, which it has described as critical for its success.
Meanwhile, Pallidus has yet to claim financial incentives it was awarded in New York and South Carolina, according to economic development agencies in the two states.
It has until late 2027 to meet the requisite milestones for claiming job development credits related to the South Carolina project, according to Kelly Coakley, director of marketing and communications for the commerce department.
York County — where the city of Rock Hill is located — was also approved for a $2 million grant “to offset infrastructure and building improvements in connection with the proposed project, but Pallidus has not yet finalized its Performance Agreement and no grant funds have been disbursed,” Coakley said.
In New York, the company has not claimed any of the $5 million in Excelsior Jobs Program tax credits it was awarded in 2022, according to Empire State Development, the state’s top economic development agency.
Through its agreement with ESD, according to the agency, Pallidus committed to creating 70 jobs at its Albany County facility. It moved to Albany from Houston in 2018 or 2019, regulatory filings indicate.
As of Nov. 27, 2023, the company’s headcount in Albany was 73, according to an email from the company to ESD that was obtained by the Business Review through a Freedom of Information Law request.
Earlier that month, Pallidus initiated furloughs and layoffs that affected about 30% of its workforce at the time, according to former employees contacted by the Business Review.
Furloughed employees who were not brought back to work were terminated in February 2024, according to the former employees. Pallidus didn’t reply to an email on this topic.
Correspondence obtained through FOIL between Pallidus and ESD last year suggests the company was considering an expansion in New York.
“They have plans to build a (redacted) square ft facility at the VISTA site in Slingerlands, NY in 2024,” Charlie Diamond, a senior advisor for Statewide Public Affairs, an Albany-based lobbying firm that was representing Pallidus, said of the company in an August 2023 email to an ESD staffer.
ESD redacted the apparent reference to the potential facility’s square footage before releasing the email to the Business Review.
Christopher Duryea, Statewide’s managing partner, told the Business Review that the firm no longer represents Pallidus. It’s not clear when the $7,500-per-month contract ended, though regulatory filings indicate it continued into this year.
Contacted by the Business Review, Rich Rosen, president of Columbia Development Cos., which has developed and marketed the Vista Tech Park, said he “had no information about Pallidus.”
“Currently there are no plans at Vista,” Rosen added.
About a week after Diamond’s email in August, ESD’s deputy director for the Capital Region, Heidi Pasos, encouraged the company to fill out a standard form for requesting financial assistance, referencing “the upcoming project.”
“At this time, we don’t have any specific information on the scope, schedule or budget and would ask you to complete the attached ESD Universal Application,” Pasos wrote to Duryea on Aug. 9.
Pallidus has not applied for any additional incentives beyond the credits it won in 2022, according to Kristin Devoe, upstate communications director for ESD.
The Business Review also asked ESD about Pallidus’ future plans in New York.
“This question is better posed to Pallidus,” Devoe said.
Last December, Pallidus disclosed in a regulatory filing that it had raised $30 million by selling debt and other securities to more than a dozen investors. The sales occurred between Dec. 5 and 18.
The debt round came about a year after the company disclosed the sale of more than $74 million in equity securities, according to a December 2022 filing.
Rich Honen, an attorney who leads Phillips Lytle LLP’s startups practice team and is not involved with Pallidus, said it’s possible that the debt is “convertible,” meaning it could turn into ownership shares if certain events occur.
The December 2023 filing with the U.S. Securities and Exchange Commission identifies George Davis as CEO and Mark Land, the prior CEO, as a director. Land’s LinkedIn indicates his tenure as CEO ended that month. He didn’t reply to a message through the platform.
In its statement to the Business Review, Pallidus acknowledged “a change in leadership at the end of 2023” but offered no further details.
Pallidus was one of dozens of parties to weigh in on proposed Internal Revenue Service and U.S. Department of Treasury rules for claiming the advanced manufacturing investment credit created through the CHIPS Act of 2022.
The tax credit is equal to 25% of an investment in an advanced manufacturing facility, according to the IRS.
In Pallidus’ May 2023 comment letter, then-CEO Land advocated for broadening the proposed rules’ definition of “semiconductor” to include “semiconductive substances” like the wafers it makes.
The more established silicon carbide manufacturer Wolfspeed Inc. endorsed the same change in a comment letter of its own.
The change would ensure that the credit “applies to the qualified investments Pallidus plans to make in South Carolina and New York,” Land wrote.
Pallidus’ South Carolina facility, once finished, would be “capable of producing 100,000 SiC wafers per month to support U.S. transportation electrification applications and ultra-high-voltage, grid-scale energy generation technologies,” according to the letter.
By comparison, the startup’s current Albany facility was built “with an initial capacity of 60,000 SiC wafers annually,” according to a separate letter to regulators from CFO Christian Talma, who sought the chance to testify on the proposed rules.
The company wouldn’t be able to meet its significant output goals and bolster the semiconductor supply chain without access to the investment credit, according to Land’s letter.
The Treasury Department didn’t immediately respond to an emailed question regarding when the tax credit rules will be finalized.
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