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November 28, 2023

CT wants semiconductor suppliers to seek CHIPS Act funding

SHAHRZAD RASEKH / CT MIRROR It's about three to four times more expensive to build and maintain "clean room" facilities for making semiconductor components. Mott Corp. is seeking federal funding to expand its clean room operation in Farmington, CT.
By Erica E. Phillips, CT Mirror

Behind double-paned windows and under bright lights, engineers in full-body, hooded coveralls work intently at precision machines. They’re producing highly specialized filters for chemical processing, aerospace, health care and semiconductor applications, and their customers are some of the most recognized companies in their sectors.

The facility, part of the Farmington operations of Connecticut-based Mott Corporation, is what’s called a “clean room,” where highly precise components can be assembled in a space free of dust and other airborne contaminants. Mott Corp. customers regularly audit the company’s facility to make sure it meets their standards.

“We make the most sophisticated technology to make the most advanced computer chips today,” Boris Levin, Mott’s chief executive, said. 

As a supplier to the semiconductor industry, Mott Corp. — and other Connecticut companies like it — stands to benefit from federal efforts to boost domestic production of microchips and strengthen the industry’s supply chains. The federal CHIPS and Science Act, signed by President Joe Biden in August of last year, made $53 billion available to expand semiconductor manufacturing, research and workforce training; it also offered a 25% tax incentive for capital investments in the sector. 

Hundreds of companies applied for the first round of funding, announced in February, intended to support construction, expansion and modernization of chip manufacturing operations. The initiative has also spurred hundreds of billions of dollars of private sector investment.

A second round of funding, announced in September, aims to support smaller supply chain companies that make components and materials for the larger manufacturers. This is where Connecticut’s economic development officials see a big opportunity for the state’s manufacturers. 

Paul Lavoie, the state’s chief manufacturing officer, said the Department of Economic and Community Development is trying to make contact with semiconductor suppliers around the state in order to build a “consortium” of companies that might work together as the industry gains momentum. A department within DECD known as the Federal Funds team is also offering advising and support to companies interested in applying for CHIPS Act funding. 

“I think it’s a very, very healthy sector of our manufacturing ecosystem,” Lavoie said.

Mott Corp. is seeking CHIPS Act funds to go toward a planned $30 million expansion of its clean room operations, as well as additional support for research and development projects. Levin said DECD has been helping the company with its initial application for the funding, which must be filed between Dec. 1, 2023 and Feb. 1, 2024.

“For a company like ours that’s midsized, not a Fortune 500 with people who do this full time, that type of help is really important,” Levin said. “We don’t have a lot of experience with this.”

Levin said the application will explain the company’s plans for the funding, how many jobs it will create and what types of skills those workers will need, among other details. It will highlight DECD’s role in offering state-level support and helping to design workforce training programs, and it will also include letters of support from Mott’s domestic customers pointing to the importance of the company’s products in their supply chains. “It’s almost a joint application,” he said. 

ASML, which designs and manufactures some of the complex machines that make semiconductor chips, is a major player within the Connecticut semiconductor ecosystem. The Netherlands-based company has invested hundreds of millions of dollars in its Wilton operation, where it employs roughly 3,000 people — and is planning to add several hundred more in the coming year. A spokesperson for ASML said it has 120 Connecticut suppliers.

The company is funding its own growth — it hasn’t applied for any CHIPS Act assistance — but it can only grow as quickly as its suppliers can accommodate, said Yogesh Sadarangani, senior global business director at ASML. For some of the more specialized suppliers, smaller companies for whom it’s very expensive to scale up, “When they have to go build a new building, you know, hire 25% more engineers and manufacturing people than they have today in the next two to three years, it’s a substantial amount of investment they have to make and risk they have to take,” Sadarangani said.

“Having funds available to them from the CHIPS Act… is an extremely helpful thing to keep the ecosystem moving at the pace that is required to keep up with the technology advancements that are needed, or being demanded by our customers, without a huge amount of financial burden being borne by smaller outfits,” he said.

Microchips are an increasingly critical component in such a wide range of personal applications, as well as business and infrastructure operations, that controlling their production has become an issue of national security, Biden administration leaders have said. But rebuilding the industry on American soil, aka “reshoring” semiconductor manufacturing, could also bring economic security to many American families, the president and congressional leaders said during the CHIPS and Science Act signing ceremony last year. 

“America invented the semiconductor … and this law brings it back home,” Biden said. “It’s in our economic interest, and it’s in our national security interest to do so.”

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