Micron Secures US$6.17 Billion CHIPS Act Subsidy to Expand US Semiconductor Manufacturing

The US Department of Commerce said Tuesday (December 10) that it has finalized a US$6.165 billion subsidy for American chipmaker Micron Technology (NASDAQ:MU) to bolster domestic semiconductor production.

The funding comes under the CHIPS and Science Act, and will support the construction of state-of-the-art manufacturing facilities in New York and Idaho, enhancing the US' share of advanced memory chip production.

Micron will be provided US$4.6 billion for its New York operations and US$1.5 billion for its work in Idaho.

Currently, the company is building a "mega campus" on 1,400 acres in Clay, New York, and expanding operations in Boise, Idaho — all expected to create approximately 20,000 jobs by the end of the decade.

According to Reuters, Micron will be making dynamic random-access memory (DRAM) chips at its New York-based site. These chips are integral to modern technologies, with applications in personal computers and smartphones, in addition to vehicles, artificial intelligence (AI) systems and advanced defense applications.

Micron’s high-bandwidth memory is a critical component for new AI models as well.

The Department of Commerce has also outlined preliminary terms for a further US$275 million to expand Micron’s facility in Manassas, Virginia. This funding aims to modernize wafer production and bring more advanced technology onshore, particularly benefiting the defense, automotive and national security sectors.

Commerce Secretary Gina Raimondo emphasized that investments in Micron and other tech companies are pivotal in reducing US reliance on foreign suppliers and strengthening supply chain resilience.

“The CHIPS for America program will supercharge American innovation and technology and make our country more secure,” she said in a previous Department of Defense release.

Micron’s subsidy is part of a broader US$125 billion investment plan extending over the next few decades. The CHIPS Act, signed into law in 2022, allocated US$52.7 billion to expand domestic semiconductor manufacturing.

Since that time, the Biden administration has announced significant subsidies to support the sector, including US$7.86 billion for Intel (NASDAQ:INTC), US$6.6 billion for Taiwan Semiconductor Manufacturing Company’s (NYSE:TSM,TPE:2330) US unit and US$1.5 billion for GlobalFoundries (NASDAQ:GFS).

Micron’s investment is projected to increase the US' share of advanced memory chip production from less than 2 percent today to about 10 percent by 2035. This shift is seen as critical as global demand for semiconductors continues to rise, with supply chain vulnerabilities exposed during the pandemic heightening the urgency to boost domestic output.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.