US Offers $162 mn Grant to Boost Microchip Technology’s Semiconductor Production

U.S. Commerce Department has disclosed plans to offer grant of $162 million to Microchip Technology in a strategic move to bolster domestic semiconductor production.
MicrochipThis allocation is intended to ramp up the manufacturing of semiconductors and microcontroller units (MCUs), pivotal components in both consumer electronics and defense sectors.

According to officials, this infusion of funds will facilitate a threefold increase in the output of mature-node semiconductor chips and microcontroller units across two of Microchip’s U.S.-based factories, Reuters news report said.

These components play a critical role in everyday devices such as automobiles, washing machines, mobile phones, internet routers, aircraft, and are also fundamental to the defense-industrial complex.

The announcement aligns with the nation’s pursuit of reducing dependency on foreign sources, particularly China, for such crucial chips.

This grant, which remains pending finalization, constitutes the second phase of the “Chips for America” program — a $52.7 billion initiative sanctioned by Congress in August 2022 to subsidize semiconductor manufacturing and research.

In a previous development, a $35 million grant was earmarked for a BAE Systems facility dedicated to producing chips for fighter planes, disclosed in December.

The intended grant to Microchip, partitioned as $90 million for expanding a fabrication unit in Colorado and $72 million for a parallel expansion in Oregon, is anticipated to contribute significantly to mitigating reliance on overseas chip production, according to officials.

Lael Brainard, Director of the White House National Economic Council, emphasized the criticality of these chips across various sectors like automotive, commercial, industrial, defense, and aerospace industries.

Ganesh Moorthy, CEO of Microchip, said the award is a direct investment to strengthen national and economic security.

This news follows Microchip’s earlier declaration in 2023 to invest $800 million towards tripling semiconductor production in its Oregon facility.

Additionally, the Commerce Department, in January, revealed plans to conduct a comprehensive survey among U.S. companies regarding the sourcing of legacy chips — current-generation and mature-node semiconductors. The objective is to mitigate national security risks posed by reliance on Chinese-made legacy chips in critical U.S. industries’ supply chains.

Commerce Secretary Gina Raimondo hinted at the prospect of approximately a dozen semiconductor chip funding awards slated for 2024, including some of substantial sums that could significantly reshape U.S. chip production.

Microchip Technology in June 2023 announced a multi-year initiative to invest approximately $300 million in expanding its operations in India.