The Biden administration has reached a final agreement to give Micron Corp. nearly $6.2 billion in subsidies from a program designed to boost American semiconductor manufacturing, allowing funds to start flowing to factories in Idaho and New York.
The award from the 2022 Chips and Science Act announced Tuesday by the Commerce Department roughly matches a preliminary deal announced in April, and follows months of due diligence and additional talks. Signing a contract protects that money from changes that could come under President-elect Donald Trump, lending confidence to company executives about the US expansion and helping President Joe Biden’s team forge its industrial policy legacy.
In addition to Micron, the Commerce Department has cemented deals with Intel Corp., Taiwan Semiconductor Manufacturing Corp., and GlobalFoundries Inc., together representing more than half of direct funding from the Chips Act. Commerce Secretary Gina Raimondo has said she wants to lock “almost all” of the money down before leaving office in January.
Micron is the sole American maker of so-called high bandwidth memory chips, which handle data storage and are essential to the artificial intelligence boom. The company’s US expansion includes one new factory in its home state of Idaho and at least two plants at a greenfield site in New York, which together comprise a roughly $75 billion investment through the end of the decade, Micron has told government officials. The chipmaker has publicly committed to $50 billion in capital expenditures in that time frame
“With this investment in Micron, we are delivering on one of the core objectives of the CHIPS program – onshoring the development and production of the most advanced memory semiconductor technology, which is crucial for safeguarding our leadership on artificial intelligence and protecting our economic and national security,” Raimondo said in a statement.
The Chips Act set aside $39 billion in grants, $75 billion worth of loans and loan guarantees, and 25% tax credits to spur investment in semiconductor factories on US soil. More than one hundred companies now plan to spend some $400 billion on such facilities, spanning everything from high-end processors to older-generation components. One explicit goal from US officials is to produce high volumes of so-called dynamic random-access memory, or DRAM, chips on economically competitive terms.
Funding from the award would support Micron’s effort to invest about $100 billion in New York and $25 billion in Idaho over a two-decade period, according to the Commerce Department. The agency also said it reached a preliminary agreement to help fund the expansion of a Micron facility in Virginia.
Micron originally requested government backing for a plant in Idaho and a four-factory DRAM complex in New York. Government officials declined to fund the latter half of that New York project since the facilities wouldn’t come online until after 2030. The company has since slow-walked plans for its third factory in New York, Bloomberg has reported, while it discusses an additional facility in Japan with Tokyo officials.
That site has also faced hiccups in the environmental review process under the Clean Water Act and other provisions, leading the company to push back its groundbreaking to sometime in 2025. That delayed construction start means Micron may not qualify for exemption from further review under the National Environmental Policy Act, which is based on factors including when construction begins.
Micron’s preliminary agreement also called for it to receive as much as $7.5 billion in loans, but the company chose not to take the loans as part of its final award, according to a senior US official, who declined to elaborate on the reasons why. The move echoes a decision by Intel to decline the loans in its final package unveiled last month.
(Updates with details on loans left out of final award in last paragraph)
