Microchip Wins $162 Million in CHIPS Funding to Expand Chip Factories

In a bid to bolster U.S. supply chains for crucial components, the Commerce Department said Thursday it would grant Microchip Technology Inc. (MCHP) $162 million in federal funding from the CHIPS Act to boost production of semiconductors and microcontrollers.

The CHIPS funding will be split across two projects, with $90 million allocated to modernize Microchip's factory in Colorado Springs, Colorado, and $72 million meant to help expand Microchip's facility in Gresham, Oregon. The funding is expected to help Microchip triple production at these facilities and reduce reliance on foreign production.

“One of the objectives of the CHIPS and Science Act is to address the semiconductor supply chain shortages we saw during the pandemic that put our national security at risk and led to furloughed auto workers and higher prices for consumers," said Secretary of Commerce Gina Raimondo in a release. "Today’s announcement with Microchip is a meaningful step in our efforts to bolster the supply chain for legacy semiconductors that are in everything from cars to washing machines, to missiles."

The funding for Microchip is the second CHIPS grant Congress has approved so far, after awarding $35 million to BAE Systems last month.

Microchip shares were down close to 1% as of about 1 p.m. ET Thursday. They are up more than 18% in the last year.