WASHINGTON—Thirty-Six states would like to be home to the central research facility for a proposed $250 million-a-year program aimed at developing cheaper and better semiconductors.

Congress, spurred by concern over declining U.S. competitiveness, is preparing to pour up to $100 million a year into the joint government-industry venture. An industry panel assigned the task of picking a site for the semiconductor technology program—known as Sematech—has been “overwhelmed with the volume of proposals,” said Bob Burger, vice president of the Semiconductor Research Corporation in North Carolina. Set up in 1982, SRC is an industry-funded program to do fundamental research in semiconductor technology.

The Sematech facility would provide working space and equipment for an estimated 500 scientists and engineers. About half the professional employees would rotate in and out from the major semiconductor firms participating in the project, said Larry Sumney, president of SRC and managing director of Sematech.

Although a decision...

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