This funding, the second tranche of money distributed from a bipartisan law signed in 2022, aims to support the expansion of domestic chip production.

Under the preliminary terms announced by the Commerce Department, Microchip Technology will utilize the funding to significantly increase its production of microcontroller units (MCUs) and other specialty semiconductors designed for critical industries such as automotive, commercial, industrial, defense, and aerospace. These chips are essential components in a wide range of products, from cars and washing machines to missiles.

As part of the agreement, $90 million will be allocated to enhance a plant in Colorado Springs, Colorado, while $72 million will be used to expand a factory in Gresham, Oregon. It is estimated that these projects will nearly triple the company's semiconductor output, thus strengthening the domestic supply chain. This expansion is expected to create over 700 direct jobs in construction and manufacturing across both states.

Secretary of Commerce Gina Raimondo expressed her enthusiasm for the partnership, stating, "Today's announcement with Microchip is a meaningful step in our efforts to bolster the supply chain for legacy semiconductors. With this proposed investment, President Biden is delivering on his promise to rebuild America's semiconductor supply chain, creating a more secure defense industrial base, lower prices for Americans, and over 700 jobs across Colorado and Oregon."

The funding for Microchip Technology's expansion will stem from the CHIPS and Science Act, a bipartisan law that President Biden signed in 2022. The law aims to provide billions of dollars in incentives to support and boost the domestic semiconductor industry. Biden has consistently highlighted the importance of the CHIPS and Science Act, emphasizing the ubiquity of microchips in everyday technology, including phones, cars, and home appliances. The administration views this initiative as crucial to reducing reliance on foreign supply chains and promoting domestic chip production.

This latest funding announcement follows a previous deal struck by the Biden administration with BAE Systems Inc., where $35 million was allocated under the CHIPS and Science Act to support the company's defense projects.

With the allocation of $162 million to Microchip Technology, the Biden administration continues its efforts to strengthen the U.S. semiconductor industry, enhance national security, reduce dependence on foreign manufacturers, and create job opportunities across multiple states. This investment marks a significant step towards rebuilding America's semiconductor supply chain.