Allegro Microsystems-backed Polar Semiconductor receives $123M in CHIPs Act funds

Minnesota-based Polar Semiconductor, which is jointly owned by Allegro Microsystems (NASDAQ:ALGM) and Sanken Electric, is the latest company to receive funds from the CHIPs Act, the Commerce Department said on Tuesday.

The company will receive a $123M grant that will allow it to expand its plant in Minnesota and result in a near doubling of its ability to produce power and sensor chips.

“Today represents an important milestone in the implementation of the historic CHIPS and Science Act as we announce the first award agreement with Polar,” said U.S. Secretary of Commerce Gina Raimondo in a statement. “The Biden-Harris Administration’s investment in Polar will create a new U.S.-owned foundry for sensor and power semiconductors and modernize and expand Polar’s facilities in Minnesota, strengthening our national and economic security, bolstering our supply chains, and creating quality jobs.”

Allegro Microsystems, which owns 30% of Polar (the remaining 70% is owned by Sanken), rose 2% in premarket trading on Tuesday.

Lael Brainard, National Economic Advisor, said the Polar announcement “marks the first award, of many to come, into communities across our nation to regain our lead in semiconductor manufacturing.”

In total, Polar has received $525M in private, federal and state funding to transform from a majority foreign-owned in-house manufacturer to a majority U.S.-owned commercial foundry, the Commerce Department added.

The $52.7B CHIPs & Science Act was passed in August 2022.

Since then, more than $35B has been allocated to various companies, including Intel (INTC), which received awards in March and September, GlobalFoundries (GFS), Taiwan Semiconductor (TSM) and several others.