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  January 5th, 2024 | Written by

U.S. Commerce Department and Microchip Technology Forge $162 Million Preliminary Deal to Strengthen Semiconductor Supply Chain

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In a significant move, the Biden-Harris Administration has unveiled a non-binding preliminary memorandum of terms (PMT) between the U.S. Department of Commerce and Microchip Technology Inc., outlining federal incentives totaling approximately $162 million under the CHIPS and Science Act. The aim is to bolster Microchip’s semiconductor supply chain onshore, enhancing the domestic production of critical microcontroller units (MCUs) and other specialty semiconductors. This initiative is pivotal for industries such as automotive, commercial, industrial, defense, and aerospace. The potential investment is set to create over 700 jobs, fostering resilience in the supply chain.

Signed into law by President Biden in August 2022, the CHIPS and Science Act aims to fortify U.S. supply chains, generate high-paying jobs, safeguard national security, and enhance competitiveness. Microchip’s MCUs and mature-node semiconductors play a crucial role in various sectors, including electric vehicles, aerospace, and defense. The proposed investment, split between facilities in Colorado Springs, Colorado, and Gresham, Oregon, is expected to triple semiconductor output, reduce dependence on foreign foundries, and fortify supply chain resilience.

Secretary of Commerce Gina Raimondo emphasized the administration’s commitment to addressing semiconductor shortages that emerged during the pandemic, jeopardizing national security and contributing to economic challenges. The investment in Microchip aligns with President Biden’s goal to rebuild America’s semiconductor supply chain, ensuring a reliable domestic chip supply and fostering job creation across states.

White House National Economic Advisor Lael Brainard highlighted the significance of manufacturing investments in Oregon and Colorado to restore semiconductor production within the U.S. These investments contribute to the broader objective of reducing reliance on global supply chains, curbing price spikes, and eliminating delays in essential products.

Under Secretary of Commerce for Standards and Technology and NIST Director Laurie E. Locascio emphasized the collaboration between government and industry to strengthen the economy, enhance national security, and create high-quality jobs. Microchip President and CEO Ganesh Moorthy expressed the company’s commitment to reinforcing national and economic security, emphasizing the positive impact on the semiconductor supply chain and workforce development.

The announcement reflects the Biden-Harris Administration’s proactive approach to addressing semiconductor challenges, aligning with broader initiatives to fortify domestic industries and create a more resilient and secure supply chain.