In a decisive move to fortify domestic semiconductor production, the U.S. Commerce Department has announced plans to award Microchip Technology a significant $162 million grant. This substantial infusion of federal funds is part of the broader "Chips for America" initiative, a $52.7 billion program approved by Congress in August 2022 to stimulate U.S. semiconductor manufacturing and research.
The grant will enable Microchip to substantially expand its production capabilities, tripling the output of mature-node semiconductor chips and microcontroller units crucial for a range of consumer and defense applications. These include everyday items like cars and washing machines to more specialized equipment such as cell phones, internet routers, airplanes, and military hardware.
Commerce Secretary Gina Raimondo emphasized the significance of the investment, stating, "The award is a meaningful step in our efforts to bolster the supply chain for legacy semiconductors that are in everything." The planned allocation includes $90 million to enhance a fabrication facility in Colorado Springs, Colorado, and $72 million to expand a factory in Gresham, Oregon. Officials expect these investments to create around 700 construction and manufacturing jobs over the next decade while reducing the nation's reliance on foreign chip production.
This initiative also aligns with broader strategic goals. Lael Brainard, the director of the White House National Economic Council, highlighted how the award will help mitigate "reliance on global supply chains that led to price spikes and long wait lines for everything from autos to washing machines during the pandemic." The move is set to curb inflationary pressures by enhancing the domestic supply of semiconductors, a crucial component in various industries.
Microchip's CEO, Ganesh Moorthy, praised the award as "a direct investment to strengthen our national and economic security." This recognition comes after Microchip announced early in 2023 its plans to invest $800 million to amplify semiconductor production at its Oregon facility.
The grant is the second of its kind following the $35 million awarded to BAE Systems in December for expanding a New Hampshire factory that produces chips for military aircraft. As 2024 unfolds, Commerce Secretary Raimondo anticipates making about a dozen more semiconductor chip funding awards, with some potentially reaching into the billions, promising a transformative impact on U.S. chip production.
In the face of escalating global competition and strategic vulnerabilities exposed by recent supply chain disruptions, this significant investment marks a pivotal step toward reasserting U.S. leadership in semiconductor manufacturing. It not only represents a significant economic commitment but also a strategic move to secure the nation's technological future and maintain its competitive edge in the global marketplace.
