US Finalizes $123 Million Chip Award for Polar Semiconductor, According to Reuters

By David Shepardson

WASHINGTON – The U.S. Commerce Department announced on Tuesday that it has finalized a grant of $123 million for Polar Semiconductor to expand its facility in Minnesota. This expansion will enable the company to nearly double its production capacity for power and sensor chips in the United States.

This grant is part of the Biden administration’s larger initiative, which allocates $52.7 billion for semiconductor manufacturing and research. This grant is the first to be finalized under this program, with funds being distributed based on Polar’s achievement of specific project milestones.

Commerce Secretary Gina Raimondo emphasized that the grant will establish a new U.S.-owned foundry for sensor and power semiconductors, increasing Polar’s production from approximately 20,000 wafers per month to 40,000. This output will support sectors such as aerospace, automotive, and defense.

Additionally, the state of Minnesota is contributing $75 million to the overall $525 million expansion project at Polar Semiconductor.

In April, Polar, which is 70% owned by Sanken Electric and 30% by Allegro MicroSystems, announced that Niobrara Capital and Prysm Capital intend to invest $175 million to acquire around 59% of the company.

The Commerce Department has earmarked more than $35 billion for 26 projects, including substantial grants to various companies for expanding chip production. This includes $6.4 billion to Samsung for a facility in Texas, $8.5 billion for Intel, $6.6 billion for TSMC to enhance its U.S. operations, and $6.1 billion for Micron Technology.

Before finalizing these awards, the department must conduct thorough due diligence.

"We anticipate this to be the first of several awards finalized soon," said Lael Brainard, a leading economic adviser at the White House. Secretary Raimondo added that more funding awards would be announced in the coming weeks and months.

The semiconductor legislation championed by President Joe Biden aims to enhance U.S. competitiveness against China and significantly increase domestic chip production. It also features a 25% investment tax credit for building chip facilities, estimated to be worth $24 billion.

In a related development, Congress has recently approved legislation designed to streamline federal permitting processes for semiconductor manufacturing projects.