U.S. Allocates $162M to Boost Microchip Semiconductor Production

By Consultants Review Team Friday, 05 January 2024

On January 4, 2024, the U.S. Commerce Department announced a substantial government funding allocation of $162 million to Microchip Technology. The primary objective of this financial support is to augment the production of semiconductors and microcontroller units (MCUs), essential components in both consumer and defense industries.

The allocated funds will empower Microchip to triple its production capacity for mature-node semiconductor chips and microcontroller units across two of its U.S. factories. These components are pivotal in various sectors, including automobiles, consumer electronics, aviation, and the defense-industrial base.

Commerce Secretary Gina Raimondo highlighted the significance of this award in fortifying the supply chain for legacy semiconductors, emphasizing its critical role in diverse devices such as washing machines, cell phones, and defense applications.

This move aligns with the United States' strategic pivot towards domestic semiconductor production, aiming to reduce reliance on foreign sources, particularly in China. The $162 million award is part of the broader "Chips for America" program, a $52.7 billion initiative approved by Congress in August 2022.

The planned disbursement includes $90 million for the expansion of a fabrication facility in Colorado and $72 million for a similar expansion in Oregon. Officials anticipate that this investment will significantly diminish dependence on foreign semiconductor production, promoting national security interests.

Lael Brainard, the director of the White House National Economic Council, underscored the critical role of these chips in various U.S. industries, including automotive, commercial, industrial, defense, and aerospace. The award is anticipated to mitigate challenges posed by global supply chain disruptions, addressing issues such as price spikes and extended wait times experienced during the pandemic.

Microchip's CEO, Ganesh Moorthy, welcomed the award as a direct investment in enhancing national and economic security. This comes on the heels of Microchip's previous commitment in 2023 to invest $800 million in tripling semiconductor production at its Oregon facility.

In January 2024, the Commerce Department unveiled plans to survey how U.S. companies source legacy chips, focusing on current-generation and mature-node semiconductors. The survey aims to address national security risks associated with China's role in the supply chains of critical U.S. industries. Secretary Raimondo indicated that more semiconductor funding awards are expected in 2024, potentially reaching billions of dollars, signaling a transformative shift in the landscape of U.S. chip production.

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