The Biden administration on Thursday said the Department of Commerce has agreed to preliminary terms with Microchip Technology Inc. [MCHP] to provide $162 million in federal incentives to boost the company’s domestic production of microcontroller chips used in automotive, aerospace, defense, and other industries.
The potential investment is being made under the CHIPS and Science Act to strengthen the U.S. supply chain for semiconductors. The non-binding preliminary memorandum of terms (PMT) is the second between DoC and industry, the first being a potential $35 million investment in BAE Systems announced in December to modernize the company’s defense-focused Microelectronics Center (Defense Daily, Dec. 11, 2023).
Microchip Technology, which is based in Arizona, manufactures microcontrollers, microprocessors, clock and timing solutions, field-programmable gate arrays, and other embedded solutions. The administration said that the proposed CHIPS funding would go to two projects, $90 million to modernize and expand a fabrication facility in Colorado Springs, Colo., and $72 million to expand a fabrication facility in Gresham, Ore.
The facility expansions will nearly triple the company’s output at the two sites and decrease reliance on foreign fabrication.
“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,” Commerce Secretary Gina Raimondo said in a statement. “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.”
With the signing of the PMT, the Commerce Department will complete its due diligence of the proposed modernization and expansion projects before signing the potential award documents with Microchip.