In a bid to strengthen domestic semiconductor manufacturing, the U.S. Commerce Department is set to grant Microchip Technology a substantial $162 million. This strategic move aims to fortify the U.S. supply chain, specifically focusing on legacy chips crucial for automotive, consumer electronics, and defense applications.
The funds will empower Microchip Technology to triple its production capacity for mature-node semiconductor chips and microcontroller units (MCUs) across two U.S. facilities. These components play a vital role in various industries, including automobiles, household appliances, telecommunications devices, aviation, and defense.
Commerce Secretary Gina Raimondo emphasized the significance of the award, stating, “This is a meaningful step in our efforts to bolster the supply chain for legacy semiconductors that are in everything.” The announcement aligns with the U.S. government’s strategy to decrease dependence on foreign sources, particularly China, for critical chip manufacturing.
Part of the “Chips for America” program approved by Congress in August 2022, the $162 million award is the second installment following a $35 million grant to a BAE Systems facility for fighter plane chip production in December.
Microchip’s expansion plan includes allocating $90 million to enhance a fabrication facility in Colorado and $72 million for a similar expansion in Oregon, aiming to strengthen the nation’s semiconductor capabilities across diverse sectors, including automotive, commercial, industrial, defense, and aerospace.
Lael Brainard, White House National Economic Council director, highlighted the award’s importance in reducing reliance on global supply chains, with expectations of mitigating challenges like price spikes and supply chain disruptions seen during the pandemic.
Microchip’s CEO, Ganesh Moorthy, welcomed the award as “a direct investment to strengthen our national and economic security.” This development follows Microchip’s earlier commitment in 2023 to invest $800 million in tripling semiconductor production at its Oregon facility.
The Commerce Department’s proactive approach, including a recent survey on legacy chip sourcing, underscores efforts to mitigate national security risks associated with China. The survey aims to understand how U.S. companies source current-generation and mature-node semiconductors, with the broader goal of reshaping U.S. chip production.
Commerce Secretary Raimondo anticipates making additional semiconductor funding awards throughout 2024, with some projects potentially running into billions of dollars, reflecting a commitment to strengthening the nation’s technological resilience and reducing vulnerabilities in critical industries.
