Polar Semiconductor to secure $120m grant from US gov.

Polar Semiconductor is poised to secure a $120 million grant from the US government to enhance its Minnesota-based facility, aiming to double its production capacity for sensor and power chips within two years, Reuters reported.

The funding, part of the current administration’s $52.7 billion initiative to support semiconductor manufacturing and research, comes after Polar’s existing stakeholders agreeing to reduce their ownership shares to US private equity firms. This move facilitates Polar’s transition to majority US ownership.

The grant, facilitated by the US Commerce Department, responds to the critical shortage of power and sensor chips during the COVID-19 pandemic, which disrupted various industries.

Laurie Locascio, Under Secretary of Commerce, emphasised the pivotal role of Polar’s technology in high-voltage applications within aerospace, automotive, and defence sectors. She highlighted that the proposed investment would enable the manufacturing of next-generation semiconductors.

Minnesota state is also contributing $75 million to the $525 million project.

Currently, Sanken Electric owns 70 per cent of Polar, with Allegro MicroSystems holding the remaining 30 per cent, according to Reuters.

Last month, Sanken announced that Niobrara Capital and Prysm Capital intend to invest $175 million, securing approximately 59 per cent ownership of Polar. Consequently, Sanken’s ownership will decrease to around 30 per cent, and Allegro’s to roughly 10 per cent.

In addition to Polar’s grant, the current administration revealed plans for seven other awards, including grants of up to $6.4 billion to South Korea’s Samsung for expanding chip production in central Texas.

Previously, Intel secured $8.5 billion in grants in March, while Taiwan’s TSMC received $6.6 billion last month to bolster its American production. The Commerce Department also announced intentions to grant $6.1 billion to memory chip maker Micron Technology to support domestic chip factory projects. Further awards are anticipated this year.

However, all awards remain subject to finalisation, and the allocated amounts might undergo revisions following due diligence by the Commerce Department.