CHIPS Act Funding of $72 Million Allocated To Oregon’s MicroChip Will Expand Gresham Factory
The CHIPS and Science Act- passed in 2022 is set to start making progress in the local semiconductor ecosystem. Severe semiconductor supply chain disruption that resulted in a drop in supply internationally from 40% in 1990 to the current 12% is now seeing manufacturing of this vital component return to local industries.
Originally built by Fujitsu in 1988, Microchip Technology’s Gresham factory will benefit from a $72 million grant towards the $800 million expansion already underway at their semiconductor factory in Gresham. This is part of $162 million in subsidies won through the federal CHIPS Act on Thursday and Microchip will receive a further $90 million for expansion to a Colorado plant.
The funding is the second major grant under the $52 billion CHIPS Act legislation approved by Congress in 2022, and the first subsidy to an Oregon manufacturer, and follows a $35 million grant in December intended to expand a New Hampshire factory. With more funding available, Oregon is hoping for hundreds of millions more in subsidies that could fund Intel’s expansion in Hillsboro, build a national lithography research center in Oregon, and also finance the growth plans of other manufacturers who qualify under the CHIPS Act.
Arizona-based Microchip already employs around 900 people at their Gresham factory, where they manufacture relatively low-tech chips and microcontrollers- essential components in planes, telecommunications networks, cars, industrial equipment, and medical tools. Director of the National Institute of Standards and Technology- Laurie Locascio, believes that the Microchip factory upgrade will triple the share of semiconductors that the company produces domestically.
Awarded $11 million in September by Oregon for the Gresham expansion- which the company thinks will add 300 jobs to the site, Microchip declined to comment on the award. A press conference is scheduled for later today following the statement of Biden administration officials who indicated that this federal money will increase the scale and pace of Micrichip’s Oregon expansion.
Chip shortages that arose during the pandemic era highlighted the crucial role that semiconductors play in the US supply chain, which spurred Congress to subsidize an increase in domestic production. Reflecting a 13% increase in Microchip’s sales totaling $4.5 billion in the first six months of its current fiscal year, the effects of subsidization appear to be reflected in the outcomes. U.S. Sen. Ron Wyden, a champion of the CHIPS Act in Congress says, “This is going to be a big shot in the arm to the state’s economy.” Demonstrating that initiatives aimed at bringing chip production back to the U.S. are paying off, the increase indicates that chip manufacturing is reshoring.
Several other Oregon manufacturers are looking to expand local operations with the aid of federal funding, including Jireh Semiconductor which hopes to expand its Hillsboro factory, and HP Inc. who want to return work to Corvallis from Asia if they receive federal support. American multinational corporation and technology company Intel- one of the world’s largest semiconductor chip manufacturers by revenue, is also relying on several billion dollars in CHIPS Act funding to offset the cost of new or expanded factories in Oregon, Ohio, and Arizona.
Both Intel and Wyden have also been driving the initiative at the Commerce Department to use CHIPS Act money to establish an advanced lithography research center in Oregon. During a Hillsboro visit last spring, Commerce Secretary Gina Raimondo confirmed that Oregon had made a compelling case for the lithography site, but they are still in the early phases of evaluating Oregon’s bid.
Because of the recent shifts in the semiconductor market, companies must make careful assessments about their role in the value chain. With geopolitical adding uncertainty there’s good reason to reassess and realign business plans, improving the position and agility of individual companies, and delivering stability in the future.