Microchip Technology Set to Receive $162 Million Grant for U.S. Semiconductor Boost

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In a move aimed at strengthening domestic semiconductor production, the U.S. Commerce Department disclosed its intention on Thursday to award Microchip Technology $162 million in government grants. The funds are designated to facilitate a threefold increase in the production of mature-node semiconductor chips and microcontroller units (MCUs) at two of Microchip's facilities in the United States. These components play a critical role in various industries, including automotive, consumer electronics, and defense.

The grant, part of the $52.7 billion "Chips for America" program approved by Congress in August 2022, represents a strategic effort to reduce dependence on foreign sources, particularly China, for these essential components. The announcement follows a $35 million award to a BAE Systems facility in December, earmarked for the production of chips for fighter planes.

Commerce Secretary Gina Raimondo emphasized the significance of the award in reinforcing the supply chain for legacy semiconductors, which are ubiquitous in everyday products. The planned grant to Microchip comprises $90 million for the expansion of a fabrication facility in Colorado and $72 million for a similar expansion in Oregon.

Lael Brainard, the White House National Economic Council director, underscored the role of the award in minimizing reliance on global supply chains, citing the disruptions experienced during the pandemic. The funds are expected to contribute to the reduction of price spikes and long wait times observed in various industries.

Microchip's CEO, Ganesh Moorthy, hailed the grant as a direct investment in enhancing national and economic security. This development follows Microchip's earlier commitment in 2023 to invest $800 million to triple semiconductor production at its Oregon facility.

The announcement aligns with the Commerce Department's proactive approach to surveying U.S. companies' sourcing of legacy chips, aiming to mitigate national security risks associated with China's involvement in the supply chains of critical U.S. industries. Commerce Secretary Raimondo anticipates making approximately a dozen semiconductor funding awards in 2024, some of which could involve substantial amounts, potentially reshaping the landscape of U.S. chip production.

Source: Reuters

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