Today, the Biden-Harris Administration announced that the U.S. Department of Commerce and Microchip Technology Inc. have reached a non-binding preliminary memorandum of terms (PMT) to provide approximately $162 million in federal incentives under the CHIPS and Science Act to support the onshoring of the company’s semiconductor supply chain. This investment would enable Microchip to significantly increase its U.S. production of microcontroller units and other specialty semiconductors built on mature-nodes critical to America’s automotive, commercial, industrial, defense, and aerospace industries and create over 700 direct construction and manufacturing jobs. President Biden signed the CHIPS and Science Act—part of his Investing in America agenda—into law in August 2022, with the goal of strengthening U.S. supply chains, creating good-paying jobs, protecting national security, and advancing U.S. competitiveness. Today’s announcement is the second PMT announcement the Department of Commerce has made under the CHIPS and Science Act.
Microchip’s microcontroller units and mature-node semiconductors are critical components in the production and manufacturing of electric vehicles and other automotives, washing machines, cell phones, airplanes, and the defense-industrial base. Shortages of microcontrollers during the pandemic affected over 1% of global GDP. By investing in Microchip, the Biden-Harris Administration would help advance U.S. economic and national security by further securing a reliable, domestic supply of these chips. The approximately $162 million in proposed CHIPS funding would be split across two projects: approximately $90 million to modernize and expand a fabrication facility in Colorado Springs, Colorado, and approximately $72 million to expand a fabrication facility in Gresham, Oregon. The projects are estimated to nearly triple the output of semiconductors the company produces at these sites, decreasing its reliance on foreign foundries and strengthening supply chain resilience, and creating good-paying jobs in construction and manufacturing.
“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,” said Secretary of Commerce Gina Raimondo. “With this proposed investment, President Biden is delivering on his promise to rebuild America’s semiconductor supply chain, creating a more secure defense industrial base, lower prices for Americans, and over 700 jobs across Colorado and Oregon.”
“This manufacturing investment in Oregon and Colorado will advance the President’s goal of making semiconductors in America again and reducing reliance on global supply chains that led to price spikes and long wait lines for everything from autos to washing machines during the pandemic,” said White House National Economic Advisor Lael Brainard.
“This proposed investment and others like it will help ensure that U.S. companies have a stable supply of the critical chip components they need to keep their factories running,” said Under Secretary of Commerce for Standards and Technology and NIST Director Laurie E. Locascio. “This is an example of how government and industry can work together to strengthen our economy, improve our national security, and increase the supply of high-quality jobs for American workers.”
“Microchip Technology manufactures semiconductors that are the backbone of electronic applications across vital industries like aerospace and defense, automotive, and medical. 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,” said Ganesh Moorthy, president and CEO of Microchip. “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 a U.S-based company, Microchip’s operations will continue to bolster the national semiconductor supply chain, as well as develop and expand our workforce.”
As explained in the Department’s first Notice of Funding Opportunity, the Department may offer applicants a PMT on a non-binding basis after satisfactory completion of the merit review of a full application. The PMT outlines key terms for a CHIPS incentives award, including the amount and form of the award. After the PMT is signed, the Department begins a comprehensive due diligence process on the proposed project and other information contained in the application. After satisfactory completion of the due diligence phase, the Department may enter into final award documents with the applicant. Terms of the final award documents are subject to negotiations with the applicant and may differ from the terms of the PMT.