With new federal aid, Minnesota chipmaker expects to speed up expansions

SkyWater Technology, Minnesota's largest semiconductor manufacturer, will speed up some of its projects and expansions with the help of government funds that Congress approved this week, its leader said.

The Bloomington-based company has plans to expand locally as well as in Indiana and Florida, Chief Executive Tom Sonderman said. But he added it's too early to know how much SkyWater will receive from the newly approved $52 billion aid package.

"A series of investments can now be accelerated because of some of the offsets that are to come," he said. "It's going to reduce the risk in some of the things SkyWater wants to do with our customers."

For more than a year, Congress has debated how and whether to provide billions of dollars of assistance to the nation's chip manufacturers. The legislation was chiefly portrayed as a way for the U.S. to counter some of the assistance that governments in other countries, notably China, give to chip makers.

Called the CHIPS Act, the measure provides direct government aid as well as a 25% tax credit to companies that invest in chip plants in the U.S. The government can take back the funds if a U.S. chip manufacturer invests in the expansion of a chip plant in China.

Some lawmakers criticized the bill as corporate welfare to an industry that is large in size, usually profitable and has easy access to capital. The nonpartisan Congressional Budget Office last week estimated that the legislation would lift the U.S. budget deficit by $79 billion over 10 years.

Minnesota's congressional delegation split on party lines on the legislation, with Democrats voting for it and Republicans against. About a year ago, Democrats Sen. Amy Klobuchar and Rep. Dean Phillips toured the SkyWater fabrication plant near the Mall of America to promote the legislation.

SkyWater's plant was built in the 1980s by Control Data, one of the nation's leading makers of mid-range and mainframe computers and Minnesota's dominant technology firm for decades. Control Data later sold the plant to Cypress Semiconductor, which sold it a few years ago to the private investors who formed SkyWater.

The company, which went public last year, is a relatively small player in the nation's chip industry with $162 million in revenue last year. It specializes in helping chip designers develop processes to build the chips they conceive, and it has manufacturing capacity for them to use.

SkyWater last week announced it would spend $1.8 billion to build a new research and production facility in West Lafayette, Ind. Purdue University and the state of Indiana are partnering with the company. Sonderman said the expansion was shaped in part by work SkyWater does with a military customer in Indiana and by engineering at Purdue.

Executives at Polar Semiconductor, a firm that operates in another former Control Data site in Bloomington, also expressed support for the CHIPS Act in recent months. They could not be reached Friday.