The grant will enable Microchip to triple the production of mature-node semiconductor chips and microcontroller units at two US factories, according to officials. These components are deemed critical for both consumer and defence applications.
Commenting on the award Commerce Secretary Gina Raimondo said that it was, "a meaningful step in our efforts to bolster the supply chain for legacy semiconductors that are in everything.”
The announcement comes as the United States is looking to boost domestic production of chips, away from foreign sources such as China.
The award, not yet finalised, is the second in a $52.7 billion programme "Chips for America", that Congress approved in 2022 to subsidise semiconductor manufacturing and research.
The first award, worth $35m, was made to BAE Systems to produce chips for fighter planes and was announced back in December.
The award to Microchip comprises of $90 million to expand a fabrication facility in Colorado and $72 million for expansion of a similar facility in Oregon.
In a statement, Microchip's CEO, Ganesh Moorthy, hailed the award as, "a direct investment to strengthen our national and economic security."
It comes after Microchip announced plans early in 2023 to invest $800 million to triple semiconductor production at its Oregon facility.
As reported by Reuters the Commerce Department is surveying how US companies are sourcing so-called legacy chips - current-generation and mature-node semiconductors - and Raimondo is expected to make about a dozen semiconductor chips funding awards in 2024, including some running into billions of dollars that could drastically reshape US chip production.
