US $123 Million Grant To Chips Maker Polar Semiconductor

The U.S. Commerce Department announced on Tuesday that it has finalized a significant $123 million grant for Polar Semiconductor, aimed at expanding its plant in Minnesota. This investment is poised to nearly double the company’s U.S. production capacity for power and sensor chips. The grant is part of the Biden administration’s broader initiative, allocating $52.7 billion for semiconductor manufacturing and research subsidies.

Expansion Details

Commerce Secretary Gina Raimondo emphasized the importance of this grant, stating it will “create a new U.S.-owned foundry for sensor and power semiconductors.” The expansion will increase Polar’s production capacity from approximately 20,000 wafers per month to 40,000, catering to growing demands in aerospace, automotive, and defense sectors.

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The overall cost of the project is estimated at $525 million, with the state of Minnesota contributing an additional $75 million to support the expansion.

Investment Partnerships

Polar Semiconductor is primarily owned by Sanken Electric (70%) and Allegro MicroSystems (30%). Recently, Polar announced that Niobrara Capital and Prysm Capital plan to invest $175 million to acquire around 59% of the company. This partnership highlights the growing interest in the semiconductor industry and the drive to enhance domestic production capabilities.

Broader Context of Semiconductor Investments

This grant to Polar is part of a larger strategy by the Commerce Department, which has allocated over $35 billion for 26 projects aimed at bolstering U.S. semiconductor manufacturing. Other significant investments include $6.4 billion in grants to South Korea’s Samsung for expanding chip production in Texas, $8.5 billion for Intel, $6.6 billion for Taiwan’s TSMC, and $6.1 billion for Micron Technology to support U.S. factories.

Future Outlook

According to top White House economic adviser Lael Brainard, “We expect this to be the first of many awards to be finalized soon.” Raimondo added that “you’re going to start to see more awards like this, dollars to companies in the coming weeks and months,” indicating a robust commitment to enhancing the U.S. semiconductor landscape.

The 2022 CHIPS Act, championed by President Joe Biden, aims to strengthen the U.S.’s competitive edge against China while significantly increasing domestic chip production. This legislation includes a 25% investment tax credit for constructing chip plants, estimated to be worth $24 billion.

Legislative Support

In a complementary move, Congress has also given final approval to new legislation aimed at streamlining federal permitting processes for semiconductor manufacturing projects. This development is expected to further accelerate the growth and expansion of the semiconductor industry within the United States.

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