US Commerce Dept to provide $162 million to Microchip Technology to increase chip production in Colorado and Oregon
The Biden Administration has announced an award of millions of dollars to Arizona-based Microchip Technology, in order to help it expand its US chip-making factories.
The US Commerce Department announced on Thursday that it plans to award Microchip Technology $162 million in government grants to increase US production of semiconductors and microcontroller units (MCUs), that are key to the consumer and defence industries.
It comes after the Biden Administration signed into law the $52.7 billion US Chips and Science Act in August 2022, which seeks to encourage chip makers to build more semiconductor manufacturing capacity in the United States.
Microchip Tech award
The US Chips and Science Act competes with Europe’s 43 billion euro European Chip Act, and China’s $40 billion state-backed investment fund – both of which are being used to encourage the building of more chip manufacturing capabilities in their respective locations.
In December last year, the US awarded a $35 million (£28m) grant to the American subsidiary of UK aerospace firm BAE Systems, which was the first semiconductor grant under the 2022 Chips and Science Act.
Now the US Commerce Department said that it and “Microchip Technology have reached a non-binding preliminary memorandum of terms (PMT) to provide approximately $162 million in federal incentives under the CHIPS and Science Act to support the onshoring of the company’s semiconductor supply chain.”
It said the investment would enable Microchip to significantly increase its US production of microcontroller units (MCUs) and other specialty semiconductors built on mature-nodes critical to America’s automotive, commercial, industrial, defence, and aerospace industries and create over 700 direct construction and manufacturing jobs.
Microchip’s microcontroller units and mature-node semiconductors are said to be critical components in the production and manufacturing of electric vehicles and other cars, washing machines, mobile phones, airplanes, and the defense-industrial base.
Shortages of microcontrollers during the pandemic affected over 1 percent of global GDP, the US Commerce Department stated.
Factory expansion, modernisation
It said the approximately $162 million would be split across two projects: approximately $90 million to modernise and expand a fabrication facility in Colorado Springs, Colorado, and approximately $72 million to expand a fabrication facility in Gresham, Oregon.
The US Commerce Dept said these projects are estimated to nearly triple the output of semiconductors Microchip produces at these sites, “decreasing its reliance on foreign foundries and strengthening supply chain resilience, and creating good-paying jobs in construction and manufacturing.”
“One of the objectives of the CHIPS and Science Act is to address the semiconductor supply chain shortages we saw during the pandemic that put our national security at risk and led to furloughed auto workers and higher prices for consumers,” said said Secretary of Commerce Gina Raimondo.
“Today’s announcement with Microchip is a meaningful step in our efforts to bolster the supply chain for legacy semiconductors that are in everything from cars, to washing machines, to missiles,” said Raimondo. “With this proposed investment, President Biden is delivering on his promise to rebuild America’s semiconductor supply chain, creating a more secure defense industrial base, lower prices for Americans, and over 700 jobs across Colorado and Oregon.”
“This manufacturing investment in Oregon and Colorado will advance the President’s goal of making semiconductors in America again and reducing reliance on global supply chains that led to price spikes and long wait lines for everything from autos to washing machines during the pandemic,” said White House National Economic Advisor Lael Brainard.
“Microchip Technology manufactures semiconductors that are the backbone of electronic applications across vital industries like aerospace and defense, automotive, and medical,” added Ganesh Moorthy, President and CEO of Microchip. “Microchip’s fabs in Colorado and Oregon, among others, perform specialised manufacturing as well as additional reliability and safety qualification for products designed for such mission-critical markets.”
“The funding Microchip is proposed to receive from the CHIPS and Science Act would be a direct investment to strengthen our national and economic security,” said Moorthy. “As a US-based company, Microchip’s operations will continue to bolster the national semiconductor supply chain, as well as develop and expand our workforce.”
Last month, Raimondo told media outlets that she expected to make about a dozen semiconductor chips funding awards in 2024, including some running into billions of dollars that could drastically reshape US chip production.