Polar Semiconductor set to gain US government grant of $120 million

Sanken Electric

13/05/2024 10:00

By David Shepardson
       WASHINGTON, May 13 (Reuters) - Polar Semiconductor is
set to receive a $120 million U.S. government grant to expand
its plant in Minnesota, which will allow the company to double
its U.S. production capacity of sensor and power chips within
two years.
    The award, part of the Biden administration's $52.7 billion
semiconductor manufacturing and research subsidy program,
follows an agreement by Polar's current owners to sell down
their stakes to U.S. private equity firms so that the company
can become majority U.S.-owned.
    The Commerce Department, which made the grant, noted
shortages of power and sensor chips were a key issue during the
COVID-19 pandemic, disrupting many sectors.
    Under Secretary of Commerce Laurie Locascio said Polar's
"technology plays a critical role in high-voltage applications
across the aerospace, automotive, and defense sectors and this
proposed investment would enable new capabilities to manufacture
the next generation of semiconductors."
    The state of Minnesota is also contributing $75 million to
the $525 million project.
    Polar is currently 70% owned by Sanken Electric  6707.T  and
30% held by Allegro MicroSystems  ALGM.O .
    Last month Sanken said that Niobrara Capital and Prysm
Capital plan to invest $175 million for around 59% of Polar.
Sanken's holding will drop to around 30% and Allegro's stake
will fall to around 10%.
    The Biden administration has announced seven other planned
awards including up to $6.4 billion in grants to South Korea's
Samsung  005930.KS  to expand chip production in central Texas.
    Intel  INTC.O  won $8.5 billion in grants in March while
Taiwan's TSMC  2330.TW  clinched $6.6 billion last month to
build out its American production. The Commerce Department also
said last month it plans to award memory chip maker Micron
Technology  MU.O  $6.1 billion to help fund domestic chip
factory projects. More awards are expected this year.
        All the awards have yet to be finalized and amounts
could change after the Commerce Department conducts due
diligence.

 (Reporting by David Shepardson; Editing by Edwina Gibbs)
 ((David.Shepardson@thomsonreuters.com; 2028988324;))