US Commits $162 Million to Boost Microchip Technology's Semiconductor Production

The US Commerce Department will grant Microchip Technology $162 million to boost semiconductor and microcontroller unit (MCU) production. The goal of this endeavor is to meet the increasing need for MCUs and mature-node semiconductor chips, which are essential parts of many different sectors.

At two of its US-based plants, Microchip Technology plans to treble its production capacity for these essential components, strengthening the supply chain for older semiconductors. The $52.7 billion "Chips for America" initiative, which Congress passed in August 2022 to stimulate American semiconductor manufacture and research, includes the award as a component, per CNA.

Gina Raimondo, the secretary of commerce, underlined how crucial this funding is to fortifying the supply chain for outdated semiconductors. The action supports the objective of minimizing dependency on foreign suppliers, especially as the US seeks to return to semiconductor manufacturing.

Enhancing US Resilience Amid Tech War with China

This announcement comes as the Biden administration focuses on boosting the production of old models, crucial for various industries, amid China's aggressive advancements in the semiconductor sector. The Biden administration is exploring measures such as tariffs to counter low prices from Chinese chipmakers while also assessing legacy chip supply chains.

Microchip Technology, a significant supplier to the US defense industrial base, will utilize the funds for the production of microcontrollers, integral components in military and space programs with widespread applications in the commercial sector.

The planned grant consists of $90 million for expanding a fabrication facility in Colorado and $72 million for the expansion of a similar facility in Oregon to reduce reliance on global supply chains, contributing to the resilience of the US automotive, commercial, industrial, defense, and aerospace industries.

The funding process is anticipated to span several years, with award tranches linked to domestic production milestones. Final terms are contingent on Microchip successfully securing environmental permits, a process currently underway. Commerce Secretary Gina Raimondo has underscored the potential for long construction delays due to permitting issues and highlighted ongoing efforts to streamline the review process, according to Business Times.

Strategic Step to Boost US Economy, Pandemic Recovery

White House National Economic Council head Lael Brainard underlined the funding's importance in fighting inflation. Brainard stressed, "Semiconductors are the key input in so many goods that are vital to our economy." She noted that robust US chip production would have reduced supply issues and price spikes throughout the recovery from the pandemic.

The Chips Act program has garnered interest from over 570 firms, indicating a strong industry response to the initiative. Raimondo anticipates making approximately a dozen awards this year, signaling continued support for semiconductor development in the United States.

The IUS government's commitment to renewing the nation's semiconductor manufacturing capabilities is demonstrated by this grant, which comes after the initial award of $35 million to BAE Systems announced in December, per a report on Yahoo! News. Through smart investments in domestic production facilities, the Biden administration hopes to alleviate semiconductor scarcity and boost national capabilities.