The federal government is poised to spend up to $162 million to make improvements to two facilities that manufacture parts necessary to keep the semiconductor supply chain moving in the United States.
The U.S. Department of Commerce and Microchip Technology Inc. have reached a non-binding preliminary agreement to provide the funding through federal incentives under the $50 billion CHIPS and Science Act.
The approximately $162 million in proposed CHIPS funding will be split across two projects: approximately $90 million to modernize and expand a fabrication facility in Colorado Springs, Colorado, and approximately $72 million for an expansion in Gresham, Oregon.
The funding is available through a federal program for private companies that funds smaller-scale facilities with capital investments under $300 million that are also important to the semiconductor manufacturing supply chain. The deadline to apply is Feb. 1.
The Department of Commerce agrees to preliminary terms through the CHIPS program on a non-binding basis following merit review of an application. The final award phase is contingent upon successful completion of a due diligence phase.
The projects announced last week are estimated to nearly triple the output of semiconductors the company produces at these sites, decreasing reliance on foreign companies and strengthening supply chain resilience. It is also expected to create well-paying jobs in construction and manufacturing.
Shortages of microconductors during the pandemic affected more than 1% of global Gross Domestic Product (GDP). Investing in Microchip would help advance U.S. economic and national security by further securing, the Department of Commerce said.
Microchip produces microcontroller units (MCUs) and mature-node semiconductors that are critical components in the production and manufacturing of electric vehicles and other automobiles, washing machines, cell phones, airplanes and the defense-industrial base, the Department of Commerce said.
The investment is expected to help Microchip significantly increase its U.S. production of MCUs and other specialty semiconductors built on mature-nodes critical to America’s automotive, commercial, industrial, defense, and aerospace industries and create over 700 direct construction and manufacturing jobs.
The preliminary agreement is the second of its kind between the Department of Commerce and a private company through the CHIPS and Science Act. The first was awarded in December to BAE Systems Electronic Systems — A $35 million incentives package to help the company replace tools and produce more chips necessary for defense programs that include the F-35 Fighter Jet Program.
Strategic Partnerships, Inc. can provide information on contract opportunities, plus existing and future government funding. For more information, contact research@spartnerships.com.
Photo by Chris Ried on Unsplash
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