Polar Semiconductor (Minnesota)

Project Summary

The U.S. Department of Commerce awarded Polar Semiconductor (Polar) up to $123 million in total direct funding under the CHIPS and Science Act to expand and modernize the company’s manufacturing facility in Bloomington, Minnesota, which is expected to almost double its U.S. production capacity of sensor and power chips within two years. The CHIPS incentive award catalyzes an investment of more than $525 million from private, state, and federal sources to transform Polar from a majority foreign-owned in-house manufacturer to a majority U.S.-owned commercial foundry, expanding opportunities for U.S. chip designers to innovate and produce technologies domestically. Through Polar’s semiconductor manufacturing operations, the investment is expected to create over 160 manufacturing and construction jobs in Minnesota.

Economic and National Security Impact

Shortages of power and sensor chips were among the most acute bottlenecks during the COVID-19 pandemic, disrupting critical industries, including automotive, healthcare, aerospace, and defense. Because of the Biden-Harris Administration’s investment in Polar, the U.S. is expected to have an expanded and more stable domestic supply of these essential semiconductor technologies, bolstering U.S. supply chain resilience as a result.

The CHIPS investment is also catalyzing U.S. private capital to transition Polar from a majority foreign-owned, in-house semiconductor manufacturer to a majority U.S.-owned, commercial foundry, enabling the company to expand its U.S. customer base. The collaborative funding approach involving the company, private investors, state and local entities, and federal support would not have been possible without the CHIPS and Science Act. This approach will help protect intellectual property (IP) developed at Polar and encourage innovation among U.S. fabless power semiconductor companies. Moreover, establishing commercial foundry capacity for sensor and power semiconductor technologies in the U.S. will help enable the U.S. defense industrial base to securely manufacture chips used in mission critical programs.

As a result of Biden-Harris Administration’s investment, Polar is expected to almost double its U.S. production capacity of sensor and power semiconductors within two years, from roughly 20,000 to roughly 40,000 wafer starts per month. The investment will also support the addition of advanced technologies for high performing compound semiconductors, cutting-edge sensors, and backend processing that will help the company manufacture the next generation of semiconductors.

Workforce and Community Impact

Through Polar’s semiconductor manufacturing operations, the Biden-Harris Administration’s investment will create over 160 manufacturing and construction jobs in Minnesota. To recruit, train, and retain the workforce needed for these projects, Polar will implement a robust workforce strategy informed by the Biden-Harris Administration’s Good Jobs Principles, and the final award includes approximately $3 million in dedicated CHIPS funding to advance these efforts. For the purposes of this project, Polar's construction partner Mortenson is utilizing a Project Labor Agreement (PLA) with the Minnesota Building and Construction Trades to support its construction workforce.

Polar Semiconductor is also joining the Department of Labor’s Advanced Manufacturing Sector Table of leading labor, industry, and workforce organizations committed to equitably building and growing the next generation of the manufacturing workforce here in the United States. The AFL-CIO Working for America Institute will support DOL’s Sector Table by working with Polar and other employer and labor organizations to develop, scale, and adopt the Manufacturing Core Curriculum (MC2), a universal pathway curriculum for advanced manufacturing, including semiconductor manufacturing, to provide workers an onramp to good manufacturing jobs and create a pipeline of job-ready workers for employers across the country.

Polar plays an important role in the Minnesota CHIPS Coalition Workforce Partnership, a coalition of employers, education and training providers, labor organizations and others that seeks to improve workforce development programs to ensure a stronger talent pipeline for immediate and future workforce needs. In addition to Polar, leading members of this coalition include Seagate Technology, the Governors Workforce Development Board (GWDB), and the Greater MSP. As part of its dedication to developing local talent, Polar intends to provide training and education benefits to its workforce and support programs to expand opportunities for economically disadvantaged individuals, which includes a commitment of nearly $500,000 to fund a tuition-free, hands-on registered apprenticeship program for individuals exploring technician roles within the semiconductor industry, as well as more than $300,000 to fund internal training programs for existing employees that provide opportunities for upskilling and continuing education.

As part of this announcement, the company has committed to expanding access to quality, affordable child care for its facility workers. Polar has also voluntarily adopted the CHIPS Women in Construction Framework and will work with contractors, trade unions, and other community and workforce partners to implement best practices aimed at expanding the construction workforce by increasing the participation of women and economically disadvantaged individuals.

Financial and Commercial Terms

As stated in the CHIPS Notice of Funding Opportunity (NOFO) for Commercial Fabrication Facilities, CHIPS for America will distribute direct funding based on the completion of project components in connection with both the capital expenditures for the project and construction, production, and commercial milestones. The program will track the performance of each CHIPS Incentives Award through financial and programmatic reports, in accordance with the award terms and conditions, to establish a compliance program to monitor that commitments are being upheld. All CHIPS funding recipients are required to adhere to restrictions pursuant to the CHIPS and Science Act and NOFO regarding stock buybacks, National Security Guardrails, and access to intellectual property. Although Polar is below the $150 million threshold for the upside sharing requirement, the company has committed to an upside sharing agreement under this award. The Department and Polar have also agreed that the company will not engage in any stock buybacks for a period of 5 years.

Other

Polar is committed to climate and environmental responsibility as a top priority in its operations. Recently, Polar transitioned its semiconductor fab operation to rely entirely on clean and renewable energy sources to fulfill its electric power needs. Polar also highly prioritizes water conservation efforts including reclamation of wastewater for both manufacturing processes and facility systems.

Polar has committed to use commercially reasonable efforts to allocate 7% of its total U.S.-based revenue each year to R&D that is conducted in the United States for a period of 5 years and will support R&D and other technology advancement efforts through the National Semiconductor Technology Center (NSTC) and the Department of Defense’s Microelectronic Commons program.

Polar will make community investments of nearly $500,000 to promote infrastructure, transportation and mobility access, health care, and entry-level relocation expenses. In addition, Polar has agreed to undertake efforts to increase its procurement of goods and services from small, minority-owned, veteran-owned, and women-owned businesses.

Progress Photos

Credit: Polar Semiconductor

 

Credit: Polar Semiconductor

 

Credit: Polar Semiconductor

Credit: Polar Semiconductor

 

Credit: Polar Semiconductor

 

Credit: Polar Semiconductor