The Biden administration announced an agreement Thursday to provide $162 million in federal funding to Microchip Technology to expand production of computer chips domestically, the second tranche of money doled out from a bipartisan law signed in 2022.
The Commerce Department announced preliminary terms with the Arizona-based manufacturer, which will allow the company to “significantly increase its U.S. production of microcontroller units (MCUs) and other specialty semiconductors built on mature-nodes critical to America’s automotive, commercial, industrial, defense, and aerospace industries and create over 700 direct construction and manufacturing jobs.”
As part of the deal, $90 million will be used to improve a plant in Colorado Springs, Colo., and $72 million will be used to expand a factory in Gresham, Ore. The projects are expected to nearly triple the company’s semiconductor output, the Commerce Department said.
“Today’s announcement with Microchip is a meaningful step in our efforts to bolster the supply chain for legacy semiconductors that are in everything from cars, to washing machines, to missiles,” Secretary of Commerce Gina Raimondo said in a statement. “With this proposed investment, President Biden is delivering on his promise to rebuild America’s semiconductor supply chain, creating a more secure defense industrial base, lower prices for Americans, and over 700 jobs across Colorado and Oregon.”
The funding will come from the CHIPS and Science Act, a bipartisan law President Biden signed in 2022 that provides billions of dollars in incentives to the domestic semiconductor industry.
Biden has repeatedly touted the importance of the CHIPS and Science Act, citing the prevalence of microchips that are used in everyday technology such as phones, cars, home appliances and more. Officials have said the law is critical to bolster domestic production of the chips to make the U.S. less reliant on foreign supply chains.
The Biden administration had previously reached a deal with BAE Systems Inc. to provide $35 million in funding through the law for the company’s defense projects.