Polar Semiconductor hopes federal subsidies will help fund a technology upgrade that will cost at least $420 million and double the output at the Bloomington plant.
Polar Semiconductor eyes federal subsidies to help double output of Bloomington plant
Polar hosted semiconductor industry leaders this week as the group strategized on how to get a piece of federal money and expand their U.S. operations.
May 9, 2023 at 11:17PM
Expansion and how to fund it is front of mind as Polar this week hosts semiconductor industry leaders from across the country as they learn more about available new money and talk about how the industry is growing again in the U.S.
The companies of the Fab Owners Alliance are counting on a piece of the $52.7 billion in money from the Creating Helpful Incentives to Produce Semiconductors Act (CHIPS), legislation that President Joe Biden pushed after a semiconductor chip shortage caused backlogs in almost all manufacturing, including automobiles and computers.
The act could translate into "easily over a $1 billion opportunity for the region," said Peter Frosch, CEO of Greater MSP, whose group is leading the Minnesota CHIPS Coalition of government, academia, manufacturers, suppliers and R&D facilities in Minnesota.
Gov. Tim Walz — whose budget includes $500 million in matching funds to leverage federal dollars — addressed the group Tuesday. He recalled Control Data Corp., the computer company that was a giant in its time, as a pioneer that built the foundation for today's chip industry in Minnesota.
"The state needs to be good partners," said Walz, touting support for workforce development and industry expansion to about 100 people gathered in a meeting room at Polar, which is housed in one of the former Control Data buildings.
Applications for some of the first rounds of CHIPS funds are throughout this spring. The federal funds will be in the form of grants, credits, loans or loan guarantees. The U.S. Department of Commerce estimates that most direct funding awards will be in the range of 5% to 15% of a project's capital expenditures.
The money would come at a time when demand is evening out as factories catch up with orders. This is causing hiccups in some companies' expansion plans.
Minnesota's semiconductor industry, though, is growing and could expand significantly with federal and state incentives, Frosch said.
Surya Iyer, president of Polar Semiconductor, said that the company is planning to spend $420 million to $450 million over the next two years to upgrade the plant.
Polar has 520 employees, and Iyer said it plans to add 100 engineers and technicians in the next two years.
Earlier this year, Polar announced a $150 million private equity commitment to help fund capacity expansion at the Bloomington facility. Iyer said Polar will also apply for CHIPS and state funds for the project.
Polar is jointly owned by New Hampshire-based Allegro MicroSystems and Japan-based Sanken Electric Co. About 60% of the company's wafers are used in vehicles.
"EVs, that's a big growth opportunity for us," Iyer said of the expanding electric vehicle market.
Yet expanding companies should not count on the CHIPS Act funds.
"It's highly competitive," Frosch said.
Bloomington-based SkyWater Technology Inc. operates Minnesota's largest chip factory, employing about 600 at its Bloomington plant. On Monday SkyWater reported a net loss of $4.3 million on revenue of $66.1 million. SkyWater has previously said that it will pursue CHIPS money to help build a $1.8 billion facility in Indiana.
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