Federal officials will provide up to $120 million in grants to Polar Semiconductor to help the company expand its chip manufacturing facilities in Minnesota, the Biden administration announced Monday, the latest in a series of grants aimed at strengthening the supply of semiconductors in the United States.
Commerce Department officials said the grant would help Polar improve technology and double production capacity at its facility in Bloomington, Minnesota, within two years. The company produces chips that are critical for cars, defense systems and power grids, federal officials said.
“We are making taxpayer dollars go as far as possible while attracting private and state investment to create jobs, secure our supply chains and bolster manufacturing in Minnesota,” said Laurie Locascio, undersecretary of commerce for standards and technology.
The funding comes from the bipartisan CHIPS and Science Act, which lawmakers passed in 2022 to increase domestic production of commercial semiconductors, the small chips crucial to most electronic products, including smartphones, computers, automobiles and weapons systems. The law gave the Department of Commerce $39 billion to distribute among companies to encourage the construction and expansion of new plants in the United States.
Increasing domestic chip production is an important component of President Biden's economic policy agenda, which focuses largely on boosting American manufacturing and bringing back jobs that have moved overseas. Only about 10 percent of the world's semiconductors are produced in the United States, down from about 37 percent in 1990.
Biden administration officials have so far announced more than $29 billion in concessions. Last month, the Commerce Department announced up to $6.1 billion in grants to Micron to help the chipmaker build plants in New York and Idaho. Other chipmakers, including Samsung, Taiwan Semiconductor Manufacturing Company and Intel, have received multimillion-dollar awards. GlobalFoundries, Microchip technology and BAE Systems received the top three federal awards.
The United States is trying to ramp up domestic semiconductor production in part to avoid the types of costly and economically damaging chip shortages that emerged during the pandemic. Federal officials said the Polar award would help avoid that kind of disruption.
“During the Covid-19 pandemic, the shortage of these chips was one of the most serious obstacles,” 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 will have to meet certain milestones before receiving payments, federal officials said. The company also plans to claim federal tax credits that help reduce the cost of building and equipping factories with production equipment.
Minnesota is also providing about $75 million in grants for the Polar expansion project, which is expected to cost more than $525 million. The company's expansion will create more than 160 manufacturing and construction jobs in Minnesota, federal officials said.
The federal award will help Polar establish itself as an independent, U.S.-owned foundry, allowing the company to expand its customer base, administration officials said. So-called foundry services involve the manufacturing of chips that are designed and marketed by other companies.
Surya Iyer, Polar's president and chief operating officer, said money was critical to the company's expansion and without it, a project of this size would not be possible.
“We're talking about a small single-digit percentage expansion instead of the huge effort we're going to put in now,” Iyer said.
