Warm embrace of CHIPS Act cash envelopes Polar Semiconductor

Minnow of among government funded whales to double production capacity

US-based Polar Semiconductor – the maker of analog and power chip devices and sensors – has bagged $123 million of CHIPS and Science Act funding to nearly double production capacity in the US.

Confirmation of the financial award came this morning from the US Department of Commerce under the CHIPS Incentives Program's Funding Opportunity for Commercial Fabrication Facilities. It follows a previously signed memorandum of terms and due diligence by the government.

The money is to be used to "expand and modernize" Polar Semiconductor's manufacturing facility in Bloomington, Minnesota, and the release of funds will be contingent on the completion of certain project milestones.

In a statement, Gina Raimondo, US Secretary of Commerce, said:

"The Biden-Harris Administration's investment in Polar will create a new US-owned foundry for sensor and power semiconductors and modernize and expand Polar's facilities in Minnesota, strengthening our national and economic security, bolstering our supply chains, and creating quality jobs."

The intent is to "almost double" the production of sensor and power chips within two years. This takes total financial backing of the company to more than $525 million from private, state and federal investment.

The notion is to "transform Polar from a majority foreign-owned in-house manufacturer to a majority U.S.-owned commercial foundry," said the DoC. It will create more manufacturing and construction jobs in the state.

Polar Semiconductor is jointly owned by Allegro and Sunken Electric, and is a supplier of 200 millimeter wafers. The company has 750 employees and turned over $230 million in 2023. It is a relative puppy among the big dogs of the chip industry that are collectively attracting billions of dollars in CHIP Act funding.

To date, CHIPs for America has earmarked upwards of $35 billion in planned funding across 16 states and is set to invest billions of dollars more in research and development. Semiconductor and electronics companies have also made public a total of $400 billion in private investments.

The obvious idea is to stimulate chip manufacturing on US soil, which is forecast to jump from 10 percent proportion of global production in 2022 when the legislation was created by the Biden/Harris administration, to a projected 14 percent by 2032. The US is also hedging its bets, spending cash to evaluate Indian chipmaking collaboration.

"The Biden-Harris Administration's investment into Polar marks the first award, of many to come, into communities across our nation to regain our lead in semiconductor manufacturing," said Lael Brainard, National Economic Advisor.

Ailing Intel is a major beneficiary of government funding, and according to preliminary memorandum of terms was allocated $8.5 billion in direct funding. Whether the company remains as the Intel we know today is another matter. ®