(Bloomberg) -- The Biden administration has finalized its first binding award under the Chips and Science Act: a $123 million grant to Polar Semiconductor that officials say could double the company’s US manufacturing capacity within two years.
After unveiling a preliminary funding agreement with Polar Semiconductor in May, US officials have have been going through a due diligence process and additional negotiations to reach a final accord. Polar, based in Bloomington, Minnesota, makes chips that go into everything from cars to air conditioners.
The company will actually receive the money once it reaches negotiated benchmarks. It remains unclear exactly when that will happen — or what the milestones are — though a senior Biden administration official said that funds should begin flowing in the near term, for this project and others.
Tuesday’s announcement marks a “new phase” for the Chips Act, said Commerce Secretary Gina Raimondo, whose agency oversees the program. The landmark 2022 legislation set aside tens of billions of dollars in grants, loans and tax breaks to revitalize American semiconductor manufacturing — and now that money is finally close to going out the door.
Companies such as Intel Corp. and Taiwan Semiconductor Manufacturing Co. pledged to invest some $400 billion in US projects in response to the incentives, and construction is underway across the country. The federal government, meanwhile, has allocated more than $35 billion in grants to support 26 of those sites.
The US is making good progress toward finalizing other awards, said the administration official, who briefed reporters ahead of the Polar announcement on condition of anonymity. Still, companies are growing anxious — perhaps none more so than Intel, which is hemorrhaging cash and urging the Biden administration to release nearly $20 billion in incentives as quickly as possible. The funding for Intel and all companies is designed as a reimbursement, to be doled out as projects make progress.
Some Chips Act-supported sites have already hit milestones that will qualify them for funding once the awards are finalized, the administration official said. The government won’t publicly disclose those benchmarks, which are tied to confidential business information like technology development and construction schedules. It does plan to announce when funds are disbursed, the official said.
Polar’s facilities in Minnesota will employ more than 160 construction and manufacturing workers, who will help produce chips with critical military applications. The project will cost a total of $525 million.
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