The Biden administration on Monday awarded up to $120 million to Polar Semiconductor to help the company expand its Minnesota chip manufacturing facility, the latest in a series of awards aimed at boosting U.S. semiconductor supply. announced that it would provide a subsidy of $1.
Commerce Department officials said the grant will help Polar upgrade its technology and double production capacity at its Bloomington, Minn., facility within two years. The company makes chips essential to cars, defense systems and the power grid, federal officials said.
“We're focusing private and state investment to create jobs, secure supply chains, and strengthen Minnesota's manufacturing while ensuring taxpayer dollars are invested as much as possible,” said Secretary of Commerce. (Standards and Technology Officer) Laurie LoCascio said.
The funding comes from the bipartisan CHIPS and Science Act that lawmakers passed in 2022 to expand domestic production of commercial semiconductors, the tiny chips essential to most electronics, including smartphones, computers, cars, and weapons systems. That's what I got. The act gave the Commerce Department $39 billion to allocate to companies to encourage them to build new factories and expand in the United States.
Expanding domestic semiconductor production is a key element of President Biden's economic policy agenda, which is primarily focused on strengthening U.S. manufacturing and restoring jobs that have been moved overseas. Only about 10% of the world's semiconductors are produced in the United States, down from about 37% in 1990.
Biden administration officials have announced more than $29 billion in incentives so far. The Commerce Department announced last month that it would give Micron up to $6.1 billion in grants to help the company build factories in New York and Idaho. Other chipmakers, including Samsung, Taiwan Semiconductor Manufacturing Company and Intel, have also won multibillion-dollar awards. GlobalFoundries, Microchip Technology and BAE Systems received the first of his three Commonwealth awards.
The United States is trying to ramp up domestic semiconductor production to prevent a shortage of expensive and economically damaging chips that occurred during the pandemic. Federal officials said Polar's award will help avoid such confusion.
“The shortage of these chips has been the most severe bottleneck during the COVID-19 pandemic,” LoCascio said. “Thanks to President Biden’s leadership, the future of the semiconductor industry is being built right here in the United States.”
Like other recipients, Polar must meet certain milestones before receiving payments, federal officials said. The company also plans to apply for federal tax credits to help reduce the cost of building the factory and equipping it with production equipment.
The state of Minnesota is also providing about $75 million in grants for Polar's expansion project, which is expected to cost more than $525 million. Federal officials say the company's expansion will create more than 160 manufacturing and construction jobs in Minnesota.
Government officials said the federal award will help Polar establish itself as an independent, U.S.-owned foundry and allow it to expand its customer base. So-called foundry services involve manufacturing chips that are designed and sold by other companies.
Surya Iyer, Polar's president and chief operating officer, said funding is critical to the company's expansion and that a project of this scale would not have been possible without it.
“What we're talking about is small single-digit percent growth rates, not a massive effort that we're going to undertake,” Iyer said.
