Commerce Department Finalizes Agreements for Almost $100 Million in Chipmaker Funding

December 6, 2024 TruthUSA

The suggested funding will undergo due diligence, negotiation, and the completion of specific milestones prior to the confirmation of any final awards.

On December 6, the U.S. Department of Commerce announced that it had reached preliminary agreements for nearly $100 million in proposed direct funding for semiconductor manufacturers in Texas and Minnesota through the CHIPS and Science Act, aimed at bolstering domestic semiconductor production.

Three chip manufacturers are involved in the agreements: Coherent, SkyWater Technology Foundry Inc., and X-Fab.

According to the Commerce Department, Coherent may receive as much as $33 million to expand and upgrade its existing facility in Sherman, Texas.

X-Fab’s project in Lubbock, Texas, could obtain up to $50 million to enhance its silicon carbide (SiC) foundry, which the company claims is the only high-volume SiC foundry in the United States. This investment is projected to generate 150 jobs, as reported by the Commerce Department.

SkyWater Technology’s facility in Bloomington, Minnesota, could be awarded $16 million in federal incentives.

Each allocation of proposed funding is contingent upon due diligence, negotiation, and the successful attainment of specific milestones before any final awards can be made. Coherent, SkyWater, and X-Fab have all expressed intentions to claim the Department of the Treasury’s Advanced Manufacturing Investment Credit, a 25 percent tax credit on qualifying capital expenditures.

SkyWater announced in a statement that it plans to complement the proposed federal funding with $19 million in incentives from the State of Minnesota’s Forward Fund and an additional $320 million from customer-based capital investments, forecasting a total exceeding $350 million in external investments throughout this decade.

The firm anticipates enhancing its production capacity by approximately 30 percent and creating 70 new jobs. As a supplier for aerospace, defense, and other vital sectors, the company projects that it will be better positioned to fulfill the increasing demand for domestically manufactured microelectronics.

SkyWater CEO Thomas Sonderman expressed pride in the company’s contribution to bolstering the domestic microelectronics infrastructure and enhancing the U.S. supply chain.

“As America’s Trusted Foundry, through our business model and expanding capabilities, we are creating a national asset for technology development, which is in a critical state domestically,” Sonderman stated. “We have been actively meeting the specific needs of the Defense Industrial Base and commercial entities, working on developing the technologies crucial for the future.”

Coherent’s proposed funding aims to support the establishment of a 150mm indium phosphide manufacturing line, whereas X-Fab’s funding would facilitate high-power applications vital for the automotive and industrial sectors.

According to X-FAB CEO Texas Rico Tillner, the demand for silicon carbide technologies is expected to remain robust, and the company is “proud to deliver solutions that support the shift towards electric mobility and renewable energy sources.”

“X-FAB Texas’ silicon carbide technologies are unparalleled in quality and yield, providing a long-lasting perspective for the site,” Tillner noted. “The proposed CHIPS funding will bolster the future success of X-FAB Texas and contribute to the development of a domestic supply chain for silicon carbide.”

Coherent Chief Strategy Officer Giovanni Barbarossa remarked that the proposed investment would position the company to expedite its leadership in indium phosphide technology and manufacturing.

According to the Department of Commerce, the CHIPS for America program has thus far allocated more than $19 billion of the over $36 billion in proposed incentives available.

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