The proposed funding to Microchip Technology would be allocated to two projects with nearly $90m for the modernisation and expansion of a fabrication facility in Colorado Springs, Colorado, and around $72m to enhance a fabrication facility in Gresham, Oregon


The semiconductor manufacturing facility of Microchip Technology in Gresham, Oregon. (Credit: Microchip Technology Inc.)

Microchip Technology has secured $162m in federal incentives from the Biden-Harris Administration to facilitate the onshoring of its semiconductor supply chain.

In this connection, the American semiconductor firm has reached a non-binding preliminary memorandum of terms (PMT) with the US Department of Commerce.

The federal incentives to be granted under the CHIPS and Science Act would enable Microchip Technology to substantially boost its US production of microcontroller units (MCUs) and other specialised semiconductors.

These components, built on mature nodes crucial to various American industries such as automotive, commercial, industrial, defense, and aerospace, are expected to generate over 700 direct construction and manufacturing jobs.

The proposed funding would be allocated to two projects with roughly $90m for the modernisation and expansion of a fabrication facility in Colorado Springs, Colorado, and approximately $72m to enhance a fabrication facility in Gresham, Oregon.

These initiatives aim to nearly triple the semiconductor output at the two sites, thus reducing dependence on foreign foundries, enhancing supply chain resilience, and fostering the creation of well-compensated jobs in construction and manufacturing.

Last year, Microchip Technology announced an investment of $880m to be made over the next several years to expand the Colorado Springs fabrication campus. The company had also announced an investment of $800m in its Oregon manufacturing facility.

Microchip Technology president and CEO Ganesh Moorthy said: “Microchip’s fabs in Colorado and Oregon, among others, perform specialized manufacturing as well as additional reliability and safety qualification for products designed for such mission-critical markets

“The funding Microchip is proposed to receive from the CHIPS and Science Act would be a direct investment to strengthen our national and economic security.”

As per the Department of Commerce, this funding announcement marks the second PMT declaration made under the CHIPS and Science Act.

The department said that Microchip Technology’s microcontroller units and semiconductors built on mature nodes play vital roles in the production and manufacturing of a wide range of products, including electric vehicles, automobiles, cell phones, airplanes, washing machines, and the defense-industrial base.

The shortages of microcontrollers during the pandemic had widespread repercussions, impacting over 1% of global GDP, said the department.

US Secretary of Commerce Gina Raimondo said: “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.

“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.”