Biden admin shells out $120M to return chip startup to US ownership

Not everything in the semiconductor industry is about shearing off every last nanometer, which is why the Biden administration is splashing out CHIPS Act funding to those pursuing less cutting edge processor production. 

Case in point, today's announcement that Bloomington, Minnesota-based Polar Semiconductor could be getting up to $120 million in CHIPS funds to double production capacity over the next two years, along with a possible buyout to return the business to US hands. 

Polar, which manufactures semiconductors used primarily for the energy industry and electric vehicles, will use the funds to double its production capacity of sensor and power chips and upgrade its manufacturing kit, as well as adding 160 jobs to boot.

Along with expanding production, the US Department of Commerce said the funding would trigger additional private capital investment to "transform Polar from a majority foreign-owned in-house manufacturer to a majority US-owned commercial foundry, expanding opportunities for US chip designers to innovate and produce technologies domestically."

In other words - sure it'll expand the output, but the real win is another majority US-owned foundry for the White House to tout. 

According to its website, Polar is currently owned by Korean conglomerate SK Group and serves as the primary fab and engineering center for Japanese firm Sanken Electric. Not exactly companies in countries with poor US relations - but overseas owners, nonetheless. 

"This proposed investment in Polar will crowd in private capital, which will help make Polar a US-based, independent foundry," said US Commerce secretary Gina Raimondo. "They will be able to expand their customer base and create a stable domestic supply of critical chips, made in America's heartland."

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The Polar award is just the latest in a string of rapid-fire CHIPS Act grants announced by the Biden administration recently. Semiconductor industry power players Samsung, Intel and TSMC have all been given funding toward building or expanding US-based chip fabs in recent weeks. The trio received $6.4 billion, $8.5 billion and $11.6 billion, respectively, for their projects. 

Polar's $120m CHIPS Act investment may seem meager by comparison, but that won't be the full extent of the deal. Minnesota's Department of Employment and Economic Development is chipping in $75 million, and Polar intends to take advantage of a tax credit that will cover 25 percent of qualified capital expenditures. 

State and federal funding is, of course, on top of whatever private investment the deal brings in. As the Commerce department noted, today's announcement is only a preliminary step, meaning there's plenty of work to do before the funding tap begins to flow. ®