In a significant development, the Biden-Harris Administration, in collaboration with Microchip Technology Inc., has unveiled a non-binding preliminary memorandum of terms (PMT) aimed at providing approximately $162 million in federal incentives under the CHIPS and Science Act. This strategic move is designed to fortify the semiconductor supply chain within the United States, with a focus on Microchip’s microcontroller units (MCUs) and other specialty semiconductors pivotal to various industries such as automotive, defense, and aerospace.
President Biden, who signed the CHIPS and Science Act into law as part of his comprehensive Investing in America agenda in August 2022, envisions strengthening U.S. supply chains, fostering job creation, safeguarding national security, and enhancing American competitiveness. The announcement marks the second PMT under this transformative Act, further reinforcing the Administration’s commitment to addressing semiconductor supply chain challenges witnessed during the pandemic.
Microchip’s MCUs and mature-node semiconductors play a vital role in the production of essential items ranging from electric vehicles to household appliances and defense equipment. The repercussions of microcontroller shortages during the global health crisis affected over 1% of the world’s GDP. By investing in Microchip, the Biden-Harris Administration aims to bolster economic and national security by securing a reliable, domestic supply of these critical chips.
The proposed $162 million in CHIPS funding is allocated across two key projects: approximately $90 million for the modernization and expansion of a fabrication facility in Colorado Springs, Colorado, and approximately $72 million for the expansion of a fabrication facility in Gresham, Oregon. These initiatives are anticipated to nearly triple Microchip’s semiconductor output at these locations, reducing dependence on foreign foundries, enhancing supply chain resilience, and generating over 700 jobs in construction and manufacturing.
Secretary of Commerce Gina Raimondo emphasized the Act’s objective to mitigate semiconductor supply chain shortages, protect national security, and spur economic growth. The proposed investment aligns with President Biden’s commitment to rebuilding America’s semiconductor supply chain, creating a more secure defense industrial base, lowering consumer prices, and fostering job growth in Colorado and Oregon.
White House National Economic Advisor Lael Brainard highlighted the significance of the proposed investment in Oregon and Colorado, aligning with the President’s vision to reestablish semiconductor manufacturing in the U.S. and reduce reliance on global supply chains.
Under Secretary of Commerce for Standards and Technology and NIST Director Laurie E. Locascio highlighted the collaborative effort between government and industry to strengthen the economy, enhance national security, and create high-quality jobs for American workers.
Microchip’s President and CEO, Ganesh Moorthy, expressed the importance of the proposed CHIPS and Science Act funding, emphasizing its direct contribution to strengthening national and economic security. Microchip, as a U.S.-based company, is committed to reinforcing the national semiconductor supply chain and expanding the workforce.
The Department’s comprehensive evaluation process, involving a preliminary memorandum of terms, due diligence, and final award negotiations, ensures a rigorous assessment of each project’s merit. The announcement with Microchip Technology represents the second PMT under the CHIPS and Science Act, with more expected throughout 2024.
CHIPS for America, a pivotal component of President Biden’s economic plan, seeks to stimulate private sector investment, create jobs, promote domestic manufacturing, and revitalize underserved communities. The program, comprising the CHIPS Program Office and the CHIPS Research and Development Office within the National Institute of Standards and Technology (NIST), aligns with NIST’s commitment to advancing measurement science, standards, and technology to enhance economic security and improve quality of life.
The Department of Commerce, overseeing CHIPS for America, has received substantial interest, pre-applications, and concept plans, reflecting the strong response from industry stakeholders. The collaboration between government and industry under the CHIPS and Science Act aims to bolster U.S. national economic security, attract private capital, and deliver broader economic benefits to the nation. As the Administration continues its efforts to reshape the semiconductor landscape, additional PMT announcements are anticipated throughout the year.
