Microchip Technology enters into a preliminary agreement with the U.S. government as part of the CHIPS and Science Act
January 4, 2024, the Biden-Harris Administration announced a collaboration between the U.S. Department of Commerce and Microchip Technology Inc., marked by a non-binding preliminary memorandum of terms (PMT). This agreement outlines approximately $162 million in federal incentives under the CHIPS and Science Act, aimed at onshoring the company’s semiconductor supply chain. The funding is for ongoing projects at two of Microchip's U.S. fabrication plants.
Approximately $90 million to modernize and expand a fabrication facility in Colorado Springs, Colorado
Approximately $72 million will be spent on expanding a fabrication facility in Gresham, Oregon.
This proposed investment would enable Microchip to significantly increase its U.S. production of microcontroller units and other specialty semiconductors built on mature nodes critical to America’s automotive, commercial, industrial, defense, and aerospace industries.
The Department has collected over 570 statements of interest along with more than 170 pre-applications with anticipated more PMT declarations in the course of 2024.
Despite this federal support, Microchip Technology Inc. anticipates minimal capital investments for fiscal years 2024 and 2025, as it gears up for future business growth. The company forecasts capital expenditures to range between $300 million and $310 million for the entirety of fiscal 2024, with expectations of even lower capital expenditures in 2025.
Microchip, alongside industry counterparts such as Intel and Micron, has noted a downturn in revenue within the memory and storage market. The company reports a weakening in sectors like automotive, industrial, and data centers, which previously enjoyed stability and success. In contrast, Microchip observes that the aerospace and defense sectors remain resilient amidst these challenges.
