Manufacturing
Feds Offer Polar Semiconductor $120M Toward Minnesota Plant Expansion
Polar Semiconductor plans to double its production capacity with the expansion of its Bloomington, Minn., chip plant.
Photo courtesy Polar Semiconductor
Chipmaker Polar Semiconductor plans to expand its manufacturing facility in Bloomington, Minn., with $120 million in federal funding from the CHIPS and Science Act, the company and U.S. Dept. of Commerce officials announced May 13. Polar says it expects to spend $525 million on the project, led by contractor Mortenson.
The expansion of Polar’s manufacturing plant, which is currently 310,000 sq ft and includes 140,000 sq ft of cleanroom space, would allow the company to double its production capacity within two years and modernize the facility to produce leading-edge chips, it says. Surya Iyer, president and chief operating officer at Polar, told Minnesota lawmakers last year that Polar plans to add 65,000-90,000 sq ft of cleanroom space.
“Our expanded manufacturing facility will allow us to increase capacity and branch into innovative technologies to serve new customers and markets,” Iyer said in a statement.
Polar and Mortenson have agreed to use a project labor agreement for the construction. The contractor did not immediately respond to inquiries.
In addition to the direct funding from the Commerce Dept.’s CHIPS program included in the preliminary agreement with Polar, the company is set to receive $75 million from a Minnesota Dept. of Employment and Economic Development program aimed at attracting and growing businesses in the state. Polar has also indicated it expects to claim a 25% investment tax credit for certain capital costs, according to Commerce Dept. officials.
Polar is currently majority foreign-owned under Japan-based Sanken Electric Co. and its U.S. affiliate, Allegro MicroSystems Inc. However, Polar announced alongside the funding news that it would transition to U.S. ownership under a deal with Niobrara Capital and Prysm Capital to buy a majority stake in the chipmaker, with Sanken and Allegro remaining as minority owners.
U.S. Commerce Secretary Gina Raimondo touted the federal funding and Polar's project as a way of creating jobs and securing domestic supply chains. The Biden administration has pushed growth of the domestic chip manufacturing sector as important for both the economy and national security following shortages that caused supply chain bottlenecks for goods made with chips during the height of the COVID-19 pandemic. Polar primarily supplies customers in the auto, aerospace, defense and medical sectors.
“This proposed investment in Polar will crowd in private capital, which will help make Polar a U.S.-based, independent foundry,” Raimondo said in a statement.
Commerce Dept. officials have offered nearly $30 billion in direct funding to chipmakers so far through the CHIPS program, though those offers, including the one to Polar, remain subject to a due diligence process and conditioned on achieving milestones set by the Commerce Dept. The CHIPS and Science Act of 2022 set aside $52 billion to support domestic semiconductor production, including $39 billion for projects to build, expand or modernize manufacturing plants.
The largest direct funding amount offered through the program has been $8.5 billion to Intel Corp. Officials have also offered multibillion-dollar grants to Micron Technology Inc., TSMC, Samsung Electronics and GlobalFoundries, and smaller amounts to Microchip Technology Inc. and BAE Systems.
