A agreement for $162 million in federal CHIPS Act subsidies to grow in Oregon and Colorado has been shelved, Microchip Technology announced Thursday.
At an investor presentation on Thursday, Microchip CEO Steve Sanghi stated, “I have put the negotiations with the CHIPS office on hold for the time being,” according to Bloomberg. We’ll probably be in the new government by the time I understand it.
What that means for plans to expand its Gresham factory is unclear. When asked on Thursday if the project will proceed, the business did not answer.
Due to low demand for its chips, the Arizona-based company revealed earlier this week that it will close a Tempe, Arizona, manufacturing next year and lay off 500 employees. Microchip manufactures chips that are used in automobiles, aircraft, industrial goods, medical equipment, and communications networks.
The Biden administration and the bipartisan legislation that sought to revitalize domestic semiconductor manufacturing have suffered as a result of the company’s difficulties. Additionally, it is a setback to Oregon’s attempts to strengthen the state’s computer chip industry, which included Microchip receiving $11 million.
Because of the infamously cyclical nature of the chip sector, the government money was made available at a time when many businesses, including Microchip, were preparing to enter a downturn and scaling back their expansion plans.
$52 billion was allotted by the CHIPS Act to support domestic semiconductor research and industrial expansion in the United States. Microchip was one of the first businesses to reach an initial agreement with the Commerce Department last January. Among its subsidies was $72 million for the Gresham expansion.
However, due to low sales, Microchip started putting factory workers on furlough in Oregon and other places within a week of that announcement. The financial agreement between the corporation and the government was never finalized.
It’s unclear if it intends to ask the Trump administration for incentives. Donald Trump, the incoming president, has openly expressed doubt about the CHIPS Act despite having backed such incentives in his first term.
Additionally, Microchip received $11 million in taxpayer funding from Oregon for its Gresham expansion. Because the 2023 bill that approved the incentives linked them to matching federal support, the corporation might not be eligible for the money at this time.
–Mike Rogoway writes on the business and technology in Oregon. His email address is [email protected].
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