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The U.S. Commerce Department has announced its intention to grant $162 million to Microchip Technology (MCHP.O) through government awards aimed at enhancing the production of semiconductors and microcontroller units (MCUs) crucial to the consumer and defense industries.
The proposed funding will enable Microchip to triple the production of mature-node semiconductor chips and microcontroller units at two of its U.S. facilities. These components play a pivotal role in various applications, including cars, washing machines, cell phones, internet routers, airplanes, and the defense-industrial base.
Commerce Secretary Gina Raimondo emphasized the significance of the award, stating that it is a substantial step in fortifying the supply chain for legacy semiconductors, which are integral to numerous products. The initiative aligns with the U.S. government’s objective to shift the production of such chips away from foreign sources, particularly China.
The planned award, part of the “Chips for America” program, follows a $52.7 billion allocation approved by Congress in August 2022 to subsidize semiconductor manufacturing and research. The Microchip award, yet to be finalized, is the second in the program. The first, amounting to $35 million, was granted to a BAE Systems facility for fighter plane chip production in December.
The US Commerce Department plans to award $162 million to Microchip Technology Inc. to help the company triple its domestic output of older-generation semiconductors that are used in everything from cars to weapons systems. https://t.co/lg7Gxxcy5H pic.twitter.com/LPPbQDTRvA
— Rifnote (@viarifnote) January 4, 2024
Microchip’s CEO, Ganesh Moorthy, expressed gratitude for the award, characterizing it as a direct investment to strengthen national and economic security. The funding, consisting of $90 million for the expansion of a fabrication facility in Colorado and $72 million for a similar facility in Oregon, aims to reduce reliance on foreign production.
According to White House National Economic Council Director Lael Brainard, the award will contribute to reducing dependence on global supply chains, addressing challenges such as price spikes and extended wait times experienced during the pandemic for products ranging from automobiles to washing machines.
This announcement follows Microchip’s earlier commitment in 2023 to invest $800 million to triple semiconductor production at its Oregon facility. Additionally, the Commerce Department plans to conduct a survey on U.S. companies’ sourcing of legacy chips, focusing on current-generation and mature-node semiconductors to mitigate national security risks associated with China.
