President and COO of Polar Semiconductor Surya Iyer, right, was introduced by Bloomington Mayor Tim Busse during a news conference at Polar Semiconductor in Bloomington on Monday. The company received $120 million in CHIPS Act federal funds. (Jerry Holt)

A crowd of Polar Semiconductor employees leapt to their feet at the company’s Bloomington headquarters Monday morning, giving a standing ovation to President Surya Iyer and the $120 million of federal funding he helped garner for a big expansion and upgrade.

Politicians like U.S. Sen. Amy Klobuchar, Gov. Tim Walz, Bloomington Mayor Tim Busse and several White House officials were all on hand to officially announce Polar’s preliminary agreement with the U.S. Department of Commerce for CHIPS (Creating Helpful Incentives to Produce Semiconductors) and Science Act program money. President Joe Biden signed the CHIPS Act in 2022, calling for nearly $53 billion of investments in the U.S. semiconductor industry to strengthen domestic manufacturing and supply chains.

The Polar deal marks the first investment from the program in Minnesota.

“Minnesota has a long history with technology. This is good for our state,” Klobuchar said. . “It’s going to allow them to double their capacity within two years.”

The automotive, aerospace, defense and health care industries all use Polar semiconductors. East Asia dominates the semiconductor industry, particularly China, Japan, Taiwan and South Korea. And since semiconductors are found in a lot of personal and commercial technology — Sen. Tina Smith called semiconductors the “brains of modern electronics” — the federal government has raised national security concerns about having too many foreign-made semiconductors in use domestically. Klobuchar said only 12% of semiconductor chips are U.S.-made.

Arati Prabhakar, director of the White House Office of Science and Technology Policy, said Polar’s expansion — a $525 million total cost — will create more than 160 new jobs, including construction work. Polar has 535 employees. And beyond the federal funds, Polar also has $75 million from the state — thanks to the Minnesota Forward Fund, a Department of Employment and Economic Development program that invests in business growth — and $175 million in private equity commitment to help finance the project.

Employees at Polar Semiconductor attended a news conference Monday in Bloomington about the company receiving $120 million in CHIPS Act federal funds. (Jerry Holt)

Iyer said the company started planning its project in late 2020.

“We were looking at a smaller expansion, not of this scale,” Iyer said. “With the CHIPS Act, we went big.”

New Hampshire-based Allegro MicroSystems and Japan-based Sanken Electric Co. jointly own Polar. But a senior administration official with the federal government said this CHIPS investment should “spin Polar out of those two entities.”

U.S.-based private equity investors Niobrara Capital and Prysm Capital will become the majority owners, Iyer said. Laurie Locascio, director of the National Institute of Standards and Technology, said the Biden administration is “allowing Polar to become a U.S.-based, independent foundry.” Privately held Polar does not disclose its annual revenue.

Economic group Greater MSP termed this investment as the “first win” for the Minnesota CHIPS Coalition, which formed in late 2022 in response to the federal funding opportunity. The coalition includes Polar and more than 35 other manufacturers, supply-chain partners and educational institutions as well as state and local government.

Earlier this year, Bloomington-based SkyWater Technology pulled the plug on a previously announced $1.8 billion semiconductor production and research and development facility in Indiana that sought CHIPS support. SkyWater had applied to CHIPS for modernization and upgrades at its manufacturing facility.