US Department of Commerce Confirms Subsidies for Pollaban Semiconductor... "First Case under the Semiconductor Act"

$123 Million (Approx. 163 Billion KRW) Scale

The first subsidy payment under the U.S. CHIPS Act, aimed at attracting semiconductor manufacturing bases of leading overseas companies, has been confirmed.

On the 24th (local time), the U.S. Department of Commerce announced that it had finalized a subsidy payment of $123 million (approximately 163 billion KRW) to Polar Semiconductor. Earlier, in May, the Department of Commerce signed a preliminary memorandum of understanding (PMT) with Polar Semiconductor. Support under the CHIPS Act is finalized after due diligence following the PMT signing, and this is the first time a subsidy payment has been confirmed.

[Image source=AP Yonhap News]

Polar Semiconductor is a company that produces semiconductors needed for automobiles, air conditioners, defense systems, and electric grids. With this support, Polar Semiconductor plans to modernize its semiconductor manufacturing facility in Bloomington, Minnesota, and nearly double its production capacity.

U.S. Secretary of Commerce Gina Raimondo said, "Today marks an important milestone in the historic implementation of the CHIPS Act," adding, "This support will catalyze investments exceeding $525 million from the private sector, state, and federal governments, transforming Polar Semiconductor from a foreign-owned manufacturer into a U.S.-owned commercial foundry." Currently, Polar Semiconductor is 70% owned by Japan's Sanken Electric.

Enacted in 2022 with bipartisan support in the U.S., the CHIPS Act is designed to encourage major global semiconductor companies?including domestic firms like Intel and Micron Technology, as well as Samsung Electronics and SK Hynix from Korea, and TSMC from Taiwan?to establish advanced semiconductor manufacturing bases in the U.S. The goal is to produce about one-fifth of the world's most advanced processors in the U.S. by 2030.

Previously, Intel, Samsung Electronics, and TSMC announced large-scale investment plans in the U.S., and the Department of Commerce has pledged subsidies of $8.5 billion, $6.4 billion, and $6.6 billion respectively. A U.S. government official recently stated in a briefing to local media that "other subsidies are also in the final stages and showing progress."

Bloomberg News reported the confirmation of the first subsidy to Polar Semiconductor, stating, "This signifies that the U.S. government's subsidy disbursement under the CHIPS Act is imminent," and noted, "The Department of Commerce does not disclose the indicators or criteria for companies to receive subsidies, as they pertain to confidential business information such as technology development and construction schedules, but plans to announce the subsidy payment schedule." The CHIPS Act provides a total of $52.7 billion (71.4 trillion KRW) over five years, including $39 billion in semiconductor production subsidies for companies building factories in the U.S. and $13.2 billion in research and development (R&D) support.