The Biden administration took a major step forward today in its bid to restore American dominance in semiconductor manufacturing.
Officials announced preliminary terms for a $120 million federal investment in Polar Semiconductor that could transform the aging Minnesota chipmaker into a cutting-edge, U.S.-owned commercial foundry able to produce a wide range of sensor and power chips on American soil.
Minnesota’s Semiconductor Roots Run Deep
The proposed Polar project builds on Minnesota’s decades-long legacy as a semiconductor industry hub. Major names like Cypress Semiconductor, Honeywell, and Seagate Technology all trace their roots to the North Star State’s fertile microchip manufacturing soil.
But in recent decades, globalization saw more and more of that production capacity shift overseas, hollowing out the region’s technology workforce. The Biden-Harris CHIPS and Science Act aims to reverse that brain drain by incentivizing companies to re-shore operations back to the United States.
Commerce Secretary Gina Raimondo said:
“This proposed investment will crowd in private capital to make Polar a U.S.-based, independent foundry.” “They’ll expand their customer base and create a stable domestic supply of critical chips, made in America’s heartland.”
A $525M Joint Private-Public Revitalization
- Proposed $120M in federal CHIPS Act incentives
- Over $400M in supplemental investments from Polar, state/local entities, and private investors
- 160+ new manufacturing and construction jobs in Bloomington, MN
- Double Polar’s current U.S. production capacity within two years
- Transition Polar from foreign majority-owned to U.S. controlled foundry
The audacious public-private partnership was made possible by the $52 billion CHIPS and Science Act that President Biden signed into law last August. In addition to the $120 million in proposed federal incentives, Polar will also claim investment tax credits worth up to 25% of qualified capex under the Treasury Department’s CHIPS provisions.
“This is where the President’s leadership changes communities and changes lives,”
said White House science advisor Arati Prabhakar.
“Polar’s semiconductors are essential to cars, electrical grids, defense systems and more – all being built right here in America once again.”
Skeptics Question Subsidizing Older Player
However, not everyone is celebrating the revival of an aging incumbent like Polar versus funding a new, cutting-edge semiconductor startup. Critics argue that Minnesota’s heyday as “Silicon Valley of the North” has long since passed.
Mike Nemelka, senior technology analyst at Boulder VC Partners said:
“Polar is yesterday’s news – this investment would be better spent incubating and attracting the semiconductor innovators of tomorrow,”
“We’re taking a 20th century model and putting it on 21st century life support. That’s not how you restore America’s technological edge.”
Further Comments
Others counter that an American-owned and operated foundry focused on mature technologies like power management and sensor chips is precisely the kind of resilient domestic manufacturing capacity the country is lacking.
“The chip shortages from COVID showed us how vulnerable we are without stable supplies of these workhorse components. You can’t have cutting edge products without a solid foundation of bulk components. Polar fills a major gap.”
Noted Fred Hickey, managing editor at TechWatch.
Summing Up
For its part, the White House is doubling down on the CHIPS initiative as a long-term national investment to reshore semiconductor capabilities lost to globalization. Polar may be just the first of many such revival projects if the administration has its way.
Prabhakar said:
“The future of the semiconductor industry is being built right here. This is part of an innovation boom coming back to America.”
More information on the Polar Semiconductor project and the CHIPS for America program can be found at www.chips.gov.
Sources: THX News & US Department of Commerce.
