On Thursday (January 4) local time, the U.S. Department of Commerce announced that it plans to provide $162 million to Microchip. The move is intended to help the company triple its production capacity. U.S. officials said the funding will allow Microchip Technology to triple its production of mature-node semiconductors and microcontrollers at two U.S. factories. These semiconductors are widely used in various fields, including automobiles, washing machines, mobile phones, Internet routers, aircraft and weapons systems.
It is reported that the funds provided by the U.S. government to Microchip Technology will be divided into two parts, US$90 million to expand a manufacturing plant of the company in Colorado, and US$72 million to expand a similar factory in Oregon.
Brainard, director of the White House National Economic Council, said that these chips are crucial to the U.S. automotive, commercial, industrial, defense and aerospace industries. By providing funds for Microchip Technology, they will help reduce dependence on the global supply chain, which has caused the prices of commodities such as cars and washing machines to soar during the new crown epidemic.
Microchip Technology CEO Ganesh Moorthy said the funds are a direct investment to strengthen U.S. national and economic security.
In August 2022, US President Biden signed the "Chip and Science Act of 2022" (referred to as the "Chip Act") into law. The bill will provide US$52.7 billion to subsidize the US chip industry.
At least $2 billion of the subsidies provided by the CHIP Act will go toward so-called legacy chips, semiconductors that are less advanced but critical to the global economy.
The $162 million provided by the U.S. government to Microchip Technology is the second tranche of funding from the CHIP Act. The first grant, worth $35 million, was announced in December and was awarded to a BAE Systems factory that produces fighter jet chips.
The U.S. Department of Commerce said last month that it is expected to issue about a dozen semiconductor chip investment subsidies in 2024, some of which are worth billions of dollars and could completely reshape U.S. chip production.