Proposed Investment of Approximately $120 Million From CHIPS and Science Act Would Build on Minnesota’s Decades-Long History in the Semiconductor Industry and Create over 160 Jobs

Today, the Biden-Harris Administration announced that the U.S. Department of Commerce and Polar Semiconductor (Polar) have reached a non-binding preliminary memorandum of terms (PMT) to provide the company with up to $120 million in proposed federal incentives under the CHIPS and Science Act. This proposed funding would catalyze investment from private and state sources to expand Polar's manufacturing facility and introduce new technology capabilities in Bloomington, Minnesota. The expansion and modernization would enable Polar to double its U.S. production capacity of sensor and power chips within two years. Additionally, this proposed investment would bring in more U.S. private capital, which would transform Polar from a majority foreign-owned in-house manufacturer to a majority U.S.-owned commercial foundry, expanding opportunities for U.S. chip designers to innovate and produce technologies domestically.

President Biden signed the CHIPS and Science Act into law in August 2022, with the goal of strengthening U.S. supply chains, creating good-paying jobs, and advancing U.S. competitiveness. Shortages of power and sensor chips were among the most acute bottlenecks during the COVID-19 pandemic, disrupting critical industries served by Polar, including automotive, healthcare, aerospace, and defense. Because of the Biden-Harris Administration’s proposed investment in Polar, the U.S. will have an expanded and stable domestic supply of these essential semiconductor technologies, bolstering U.S. supply chain resilience as a result. Additionally, this investment can help strengthen our national security by securing a domestic chip supply for defense purposes.

This proposed CHIPS funding supports an investment of more than $525 million, catalyzing contributions from the company, state and local entities, and private investors. This collaborative funding approach would not have been possible without the CHIPS and Science Act.

“Thanks to President Biden’s leadership, with this announcement we are making taxpayer dollars go as far as possible to create jobs, secure our supply chains, and bolster manufacturing in Minnesota,” said U.S. Secretary of Commerce Gina Raimondo. “This proposed investment in Polar will crowd in private capital, which will help make Polar a U.S.-based, independent foundry. They will be able to expand their customer base and create a stable domestic supply of critical chips, made in America’s heartland.”

Through Polar’s semiconductor manufacturing operations, the Biden-Harris Administration’s proposed investment would create over 160 manufacturing and construction jobs in Minnesota. For the purposes of this project, Polar and construction partner Mortenson have committed to utilizing a Project Labor Agreement (PLA) to support its construction workforce. Polar plays a leading role in the Minnesota CHIPS Coalition Workforce Partnership, a coalition of employers, education and training providers, labor organizations and others that seeks to improve workforce development programs to ensure a stronger talent pipeline for immediate and future workforce needs. As part of this announcement, Polar has committed to expanding access to quality, affordable child care for its facility workers.

Additionally, Polar is committed to climate and environmental responsibility as a top priority in its operations. Recently, Polar transitioned its semiconductor fab operation to rely entirely on clean and renewable energy sources to fulfill its electric power needs. Polar also highly prioritizes water conservation efforts including reclamation of wastewater for manufacturing processes and water collection for irrigation.

“When President Biden signed the CHIPS and Science Act, he put a stake in the ground about the importance of semiconductor manufacturing in the United States,” said Assistant to the President for Science and Technology and Director of the White House Office of Science and Technology Policy Arati Prabhakar. “This is where the President’s leadership changes communities and changes lives. This proposed federal investment will catalyze $525 million from private companies and the state of Minnesota to create a healthy supply of made-in-Minnesota semiconductors that are essential to producing cars, electrical grids, defense systems, and more.”

“The future of the semiconductor industry is being built right here in the United States, and Polar will be part of that innovation boom. The company’s technology plays a critical role in high-voltage applications across the aerospace, automotive, and defense sectors and this proposed investment would enable new capabilities to manufacture the next generation of semiconductors,” said Under Secretary of Commerce for Standards and Technology and National Institute of Standards and Technology Director Laurie E. Locascio.

“We are very pleased to announce this historic investment in Minnesota semiconductor manufacturing. Our expanded manufacturing facility will allow us to increase capacity and branch into innovative technologies to serve new customers and markets,” said Surya Iyer, President and Chief Operating Officer of Polar Semiconductor. “Polar and its employees are grateful to the U.S. Department of Commerce and the State of Minnesota for their commitment to the future of American semiconductor manufacturing and appreciate the strong collaboration with the CHIPS Program Office, Minnesota Department of Employment and Economic Development (“DEED”), and the City of Bloomington, Minnesota, throughout this process. Polar is also pleased to welcome a significant equity investment from Niobrara Capital and Prysm Capital, which will allow the Company to become U.S.-owned, and for the continued support of our long-term partners, Sanken Electric and Allegro MicroSystems.”

Polar has received state and federal support for its proposed expansion, including $75 million from the Minnesota Department of Employment and Economic Development (DEED). The company has also indicated that it plans to claim the Department of the Treasury’s Investment Tax Credit, which is expected to be up to 25% of qualified capital expenditures.

As explained in its first Notice of Funding Opportunity, the Department may offer applicants a PMT on a non-binding basis after satisfactory completion of the merit review of a full application. The PMT outlines key terms for a potential CHIPS incentives award, including the amount and form of the award. The award amounts are subject to due diligence and negotiation of award documents and are conditional on the achievement of certain milestones. After the PMT is signed, the Department begins a comprehensive due diligence process on the proposed projects and continues negotiating or refining certain terms with the applicant. The terms contained in any final award documents may differ from the terms of the PMT being announced today.

About CHIPS for America

The Department has received more than 650 statements of interest, more than 200 pre-applications and full applications for NOFO 1, and more than 160 small supplier concept plans for NOFO 2. The Department is continuing to conduct rigorous evaluation of applications to determine which projects will advance U.S. national and economic security, attract more private capital, and deliver other economic benefits to the country. The announcement with Polar Semiconductor is the eighth PMT announcement the Department of Commerce has made under the CHIPS and Science Act, with additional PMT announcements expected to follow throughout 2024.CHIPS for America is part of President Biden’s economic plan to invest in America, stimulate private sector investment, create good-paying jobs, make more in the United States, and revitalize communities left behind. CHIPS for America includes the CHIPS Program Office, responsible for manufacturing incentives, and the CHIPS Research and Development Office, responsible for R&D programs, that both sit within the National Institute of Standards and Technology (NIST) at the Department of Commerce. NIST promotes U.S. innovation and industrial competitiveness by advancing measurement science, standards, and technology in ways that enhance economic security and improve our quality of life. NIST is uniquely positioned to successfully administer the CHIPS for America program because of the bureau’s strong relationships with U.S. industries, its deep understanding of the semiconductor ecosystem, and its reputation as fair and trusted. Visit https://www.chips.gov to learn more.