On Thursday, the U.S. Commerce Department announced it had reached a non-binding preliminary agreement of terms (PMT) with Microchip Technology Inc. for federal incentives to bring more of the company’s semiconductor supply chain onshore.
The agreement would provide Microchip with approximately $162 million in funding through the CHIPS and Science Act to help Microchip increase its U.S. production of microcontroller units (MCUs) and other specialty semiconductors built on mature-nodes critical for the country’s automotive, commercial, industrial, defense and aerospace industries. The agreement will create more than 700 direct and manufacturing jobs, officials said.
“One of the objectives of the CHIPS and Science Act is to address the semiconductor supply chain shortages we saw during the pandemic that put our national security at risk and led to furloughed auto workers and higher prices for consumers. Today’s announcement with Microchip is a meaningful step in our efforts to bolster the supply chain for legacy semiconductors that are in everything from cars, to washing machines, to missiles,” Secretary of Commerce Gina Raimondo said. “With this proposed investment, President Biden is delivering on his promise to rebuild America’s semiconductor supply chain, creating a more secure defense industrial base, lower prices for Americans, and over 700 jobs across Colorado and Oregon.
The CHIPS and Science Act was signed into law in August 2022, with the goal of strengthening the U.S. microchip supply chain. The Microchip Technology agreement was the second PMT Commerce has made under the legislation.
Microchip’s microcontroller units and mature-node semiconductors are critical to the production and manufacturing of electric vehicles and other automobiles, as well as in washing machines, cell phones, and airplanes, among other uses. The funding in the proposed agreement would help Microchip modernize and expand a fabrication facility ($90 million) in Colorado Springs, Colo., and expand the company’s fabrication facility ($72 million) in Gresham, Ore.
“Microchip’s fabs in Colorado and Oregon, among others, perform specialized manufacturing as well as additional reliability and safety qualification for products designed for such mission-critical markets,” Ganesh Moorthy, Microchip’s president and CEO said. “The funding Microchip is proposed to receive from the CHIPS and Science Act would be a direct investment to strengthen our national and economic security. As a US-based company, Microchip’s operations will continue to bolster the national semiconductor supply chain, as well as develop and expand our workforce.”