The Biden administration on Thursday announced a $162 million grant to Microchip Technology as part of its efforts to increase domestic semiconductor chip production and reduce reliance on overseas suppliers. The funding will allow Microchip to expand its production capacity in Colorado and Oregon.
Microchip to Expand Facilities with Federal Support
Microchip Technology, a major supplier of microcontroller, mixed-signal, analog and Flash-IP integrated circuits, will utilize the funding to “increase legacy chip production needed by the auto makers and defense contractors,” the Commerce Department said.
The $162 million investment comes from the $52 billion CHIPS and Science Act passed by Congress last year to boost domestic manufacturing of semiconductor chips. It marks the Biden administration’s first grant awards under the semiconductor provisions in that legislation.
Specifically, Microchip will use the funding for expansions at three of its facilities:
- $90 million to increase microcontroller production at its Colorado Springs facility
- $36 million to boost analog chip production at its Gresham, Oregon plant
- $36 million to raise capacity at its Portland facility
Commerce Secretary Gina Raimondo said the grants “will revive domestic manufacturing and strengthen America’s supply chains at this critical time.”
Effort to Reduce Supply Chain Disruptions
The support aims to alleviate ongoing shortages of chips which are essential components in automobiles and various electronics. Supply chain disruptions stemming from the COVID-19 pandemic and geopolitical issues have created turmoil for these key industries.
Domestic production currently accounts for only 12% of global semiconductor manufacturing capacity. The grants to Microchip look to lessen U.S. dependence on overseas chip production, particularly in Asia.
Raimondo said decreasing reliance on foreign chip manufacturers is imperative given past supply issues. “We need to bring semiconductor manufacturing back to the United States to strengthen our economy and national security,” she remarked.
Microchip to Add Jobs, Production Capacity
As part of the facility expansions, Microchip expects to create over 700 additional jobs. The projects are estimated to take approximately two years to complete.
Once the new production lines are running, Microchip said its Colorado Springs campus could produce up to 100,000 wafers per month, representing a 50% boost over current output. The plant manufactures microcontroller units which serve as key components in vehicles and an array of electronics.
Meanwhile, the funding will enable a 70% rise in analog chip fabrication capacity at its Gresham site. Analog devices help convert real world phenomena like sound, pressure and temperature into digital signals.
Microchip CEO Ganesh Moorthy called the investments “crucial for increasing the production of the analog and microcontroller chips.”
Further Investments Under CHIPS Act Forthcoming
Additional funding through the CHIPS legislation is expected in the coming months. The Biden administration has stressed the urgency around augmenting domestic chip fabrication abilities.
Commerce Under Secretary Don Graves noted the Microchip grants are “just the beginning of this type of investment.” He said the announcements represent a concerted push to “rebuild the pipeline of talent and increase semiconductor research and development right here in the United States.”
While positioning the U.S. to better contend with global rivals, the policy also looks to mitigate potential issues surrounding Taiwan. The self-governing island currently accounts for over 60% of global foundry market share. Rising tensions with China have raised concerns over supply chain vulnerabilities should a conflict arise.
Industry Response
The Semiconductor Industry Association, which lobbied extensively for passage of the CHIPS Act, applauded the administration’s move to start deploying funds.
SIA President & CEO Don Levy said the incentives serve as an important step to “strengthen semiconductor research, diversify chip supply chains, and ramp up production of chips to meet current demand and foster continued growth.”
Microchip welcomed the “crucial” investments at a critical moment for shoring up domestic chip fabrication abilities. A company spokesperson said the financial backing will equip Microchip to address near-term needs while positioning for future expansion.
Outlook Going Forward
The Biden administration has emphasized domestic tech manufacturing as essential for economic growth and national security interests. The grants to Microchip represent initial investments, but further funding through the CHIPS legislation seems imminent.
Commerce Secretary Raimondo noted her department “will be announcing more investments in the coming weeks and months” as part of fortifying domestic semiconductor supply chains.
With the Microchip funding in place, the administration’s next moves around implementing the sweeping legislation will be key. Ongoing monitoring of supply dynamics, coordination with industry partners and delivering on policy goals will remain at the forefront.
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