The Biden administration has announced plans to provide $162 million in federal grants to Microchip Technology, an Arizona-based semiconductor company, to bolster American semiconductor manufacturing. This is the second grant awarded under a new program aimed at ensuring a stable supply of semiconductors for American companies. The investment will enable Microchip to increase its production of semiconductors used in various industries, including automotive, defense, appliances, medical devices, and military products. The administration expects the grant to create over 700 jobs in construction and manufacturing.
The funding will be used by Microchip to modernize and expand its facilities in Colorado Springs and Gresham, Oregon. The company’s chips, although not cutting-edge, are vital components of military and space programs, making Microchip one of the largest suppliers of semiconductors to the defense industrial base. The grant will also help decrease the company’s reliance on foreign facilities for chip production. The increased funding for American manufacturing and reduced dependence on foreign chips was motivated by the global chip shortage during the pandemic, which highlighted the need to secure domestic supplies.
The investment is part of the 2022 CHIPS and Science Act, which allocated $53 billion for the Commerce Department to invest in the semiconductor industry, including federal grants to encourage chip companies to establish facilities in the US. Larger awards for major chip fabrication facilities owned by companies like Intel and Taiwan Semiconductor Manufacturing Company (TSMC) are expected to be announced in the coming months. The Commerce Department also plans to conduct a survey to identify how US companies are obtaining legacy chips and reduce security risks associated with Chinese investments in less advanced semiconductors.
The agreement with Microchip Technology is a nonbinding preliminary agreement, and the Commerce Department will conduct due diligence before finalizing the terms of the award. Over 570 statements of interest and 170 pre-applications, full applications, and concept plans were received by the department from companies and organizations interested in the funding.