US computer memory chip maker Micron Technology Inc. is reportedly set to accept $6.1 billion grants from the Commerce Department to fund its domestic chip plants in a bid to revitalize semiconductor output in the country.
Sources familiar with the matter said the subsidies have yet to be finalized and may be officially confirmed next week. The awards package will also include loans, the amount of which has not been specified, according to the sources.
Commerce Secretary Gina Raimondo stated that once a preliminary deal is announced, the company will undergo due diligence before it can obtain the funds in tranches linked to certain project benchmarks.
US President Joe Biden is said to be making a trip to Syracuse, New York, on April 25 as part of the grants’ announcement. Idaho-based Micron is currently working on establishing some chip factories within the Central New York region and in Boise.
Part of the federal funds is also expected to pay for the expansion of the firm’s chip facility in its home state.
Representatives for Micron, the Commerce Department, and the White House have declined to comment on the matter.
Reviving the US’s Semiconductor Production
In August 2022, Biden signed the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act into law, allowing around $280 billion in new funds to be allocated to strengthening initiatives focused on semiconductor development in the US.
The landmark law also intended to prevent China from benefiting from $52 billion worth of chip funding and decrease the reliance of the US tech supply chain on the country and Taiwan to increase local output.
The US deemed such a move necessary as its overall semiconductor manufacturing capacity dropped from 37% in 1990 to 12% in 2020.
The Act has become more significant over the past year, especially as the artificial intelligence (AI) space observed major innovations that bolstered demand for advanced semiconductors.
Six preliminary awards have been revealed so far, including three to companies producing older-generation semiconductors and multibillion-dollar grants for chip-making giants Intel Corp., Taiwan Semiconductor Manufacturing Co. (TSMC) Ltd., and Samsung Electronics Co. Ltd.
Micron and Samsung build high-bandwidth memory (HBM) chips, which are essential for the faster processing speed that AI models require. The two companies expect to see more robust earnings due to AI-driven demand.
New York Governor Kathy Hochul said Micron’s reported subsidies would help the upstate economy recover, as new funds from the CHIPS and Science Act will support the addition of 50,000 jobs, the investment of $100 billion, and millions of dollars in community benefits.
