Polar Semiconductor lands up to $120 million from CHIPS program

Polar Semiconductor will receive up to $120 million in federal funds to expand and upgrade its Bloomington facility.

The U.S. Department of Commerce and Polar signed a preliminary agreement for the money, which comes from the CHIPS (Creating Helpful Incentives to Produce Semiconductors) and Science Act program. Polar's project will cost $525 million.

President Joe Biden signed the CHIPS act in 2022. The program calls for nearly $53 billion of investments in the U.S. semiconductor industry to strengthen domestic manufacturing and supply chains. The Polar deal marks the first investment from the program in Minnesota.

"Minnesota has a long history with technology. This is good for our state," said U.S. Sen. Amy Klobuchar. "It's going to allow them to double their capacity within two years."

The automotive, aerospace, defense and health care industries all use Polar semiconductors. Arati Prabhakar, director of the White House Office of Science and Technology Policy, said Polar's expansion will create more than 160 new jobs, including construction work. Polar has 535 employees currently.

Beyond the federal funds, Polar also has $75 million from the state — thanks to the Minnesota Forward Fund, a Department of Employment and Economic Development program that invests in business growth — and $175 million in private equity commitment to help finance the expansion project.

Surya Iyer, president of Polar Semiconductor, said the company started planning its project in late 2020.

"We were looking at a smaller expansion, not of this scale," Iyer said. "With the CHIPS Act, we went big."

New Hampshire-based Allegro MicroSystems and Japan-based Sanken Electric Co., jointly own Polar currently. But a senior administration official with the federal government said this CHIPS investment should "spin Polar out of those two entities."

U.S.-based private equity investors Niobrara Capital and Prysm Capital will become the majority owners, per Iyer. Dr. Laurie Locascio, director of the National Institute of Standards and Technology, said the Biden Administration is "allowing Polar to become a U.S.-based, independent foundry."

Earlier this year, Bloomington-based SkyWater Technology pulled the plug on a previously announced $1.8 billion semiconductor production and research and development facility in Indiana that sought CHIPS support. SkyWater had applied to CHIPS for modernization and upgrades at its manufacturing facility.

This story will be updated.