Polar Semiconductor Announces Plans to Expand Semiconductor Manufacturing Facility in Minnesota
- Polar's Historic $525 Million Investment to Be Supported by Minnesota State Incentives and Potential Federal Funding from the CHIPS and Science Act
- Niobrara Capital and Prysm Capital Will Lead $175 Million Equity Investment in Polar to Become Majority Investors and Transition Company to U.S.-Owned Foundry
- Investment Plan Will Double Polar's Domestic Semiconductor Manufacturing Capacity and Create Over 160 New Jobs in Minnesota
Polar Semiconductor ("Polar" or the "Company"), the only U.S.-based manufacturer specializing in sensor, power, and high-voltage semiconductors, today announced plans to expand its Bloomington, Minnesota manufacturing facility and branch into innovative technologies to serve new customers and markets. Polar expects to invest approximately $525 million in the expansion of the facility over the next two years, subject to receipt of appropriate approvals and federal, state, and local incentives. Polar has signed a non-binding preliminary memorandum of terms with the Department of Commerce, under which it would receive $120 million in proposed direct funding as part of the U.S. CHIPS and Science Act, and a $75 million investment from the State of Minnesota. In addition, Polar has entered into a definitive agreement pursuant to which Niobrara Capital and Prysm Capital are leading an equity investment of $175 million, enabling Polar to transition to a U.S.-owned merchant foundry. Polar plans to claim the Department of the Treasury's Investment Tax Credit, which is expected to be up to 25% of qualified capital expenditures.
Through these investments, Polar expects to:
- Double its current U.S. production capacity of 200mm semiconductor wafers, increasing production from approximately 20,000 wafers per month to nearly 40,000 wafers per month;
- Expand and modernize its facility with new automation and AI capabilities to become globally competitive through economies of scale;
- Better serve customers in automotive, aerospace and defense, optoelectronics, MEMS, and medical devices in the U.S. with cutting-edge semiconductor products; and
- Create over 160 new jobs to further strengthen Polar's support of its community.
Surya Iyer, President and COO of Polar Semiconductor, said, "We are very pleased to announce this historic investment in Minnesota semiconductor manufacturing. Our expanded manufacturing facility will allow us to increase capacity and branch into innovative technologies to serve new customers and markets. Polar and its employees are grateful to the U.S. Department of Commerce and the State of Minnesota for their commitment to the future of American semiconductor manufacturing and appreciate the strong collaboration with the CHIPS Program Office, Minnesota Department of Employment and Economic Development ("DEED"), and the City of Bloomington, Minnesota, throughout this process. Polar is also pleased to welcome a significant equity investment from Niobrara Capital and Prysm Capital, which will allow the Company to become U.S.-owned, and for the continued support of our long-term partners, Sanken Electric and Allegro MicroSystems."
Chip Schorr, Founder and Managing Partner of Niobrara Capital, said, "Polar is positioned to enable many of America's most critical industries, such as aerospace and defense, automotive and medical, to have a dedicated, high performance, low cost, onshore source of power semiconductors and sensors. We are pleased to be partnering with the company to support its growth and the growth of U.S. technology manufacturing leadership."
Jay Park, Co-Founder and Managing Partner of Prysm Capital, said "The public and private investment in Polar is a testament to the strength of Polar's offering and team and a significant event for onshore technology investment in America. We are already seeing robust demand for Polar's planned capacity that exceeds our expectations and reinforces our confidence in Polar."
"Thanks to President Biden's leadership, with this announcement we are making taxpayer dollars go as far as possible to create jobs, secure our supply chains, and bolster manufacturing in Minnesota," said U.S. Secretary of Commerce Gina Raimondo. "This proposed investment in Polar will crowd in private capital, which will help make Polar a U.S.-based, independent foundry. They will be able to expand their customer base and create a stable domestic supply of critical chips, made in America's heartland."
"When President Biden signed the CHIPS and Science Act, he put a stake in the ground about the importance of semiconductor manufacturing in the United States," said Assistant to the President for Science and Technology and Director of the White House Office of Science and Technology Policy Arati Prabhakar. "This is where the President's leadership changes communities and changes lives. This proposed federal investment will catalyze $525 million, including capital from private investors and $75 million from the state of Minnesota, to create a healthy supply of made-in-Minnesota semiconductors that are essential to producing cars, electrical grids, defense systems, and more."
"The future of the semiconductor industry is being built right here in the United States, and Polar will be part of that innovation boom. Their high-voltage technology has critical customer end uses across the aerospace, automotive, and defense sectors, and this proposed investment would help them introduce new capabilities to manufacture the next generation of semiconductors," said Under Secretary of Commerce for Standards and Technology and National Institute of Standards and Technology Director Laurie E. Locascio.
"If we want our country to continue leading the global economy, we must stay on the cutting edge of manufacturing. This landmark investment in Polar Semiconductor's Bloomington facility will be a game changer for domestic semiconductor manufacturing," said Senator Amy Klobuchar. "I'm proud to have worked with Polar Semiconductor to secure the resources needed to ensure Minnesota continues to be a leader in advanced manufacturing for decades to come."
Governor Tim Walz said, "As a top state for innovation, education, and workforce training, Minnesota has an established reputation as a leader in the growing high-tech economy. We have been consistent and creative in our support for companies like Polar that want to establish and grow their businesses here in Minnesota. We're grateful to the Commerce Department for its commitment to Minnesota's future and its partnership with our state."
The $75 million state award is through the Minnesota Forward Fund, a new DEED program Gov. Walz signed into law last year to invest $400 million in business growth and attract new companies to Minnesota. It also provides matching funds for companies seeking federal resources like CHIPS Act funding. This is the Minnesota Forward Fund's first award.
"The Minnesota Forward Fund is one of the ways the Walz-Flanagan Administration is supporting innovative companies like Polar Semiconductor that are helping build Minnesota's cutting-edge economy," said DEED Commissioner Matt Varilek. "The number of semiconductor companies in Minnesota is growing, and they're creating hundreds of new, high-paying jobs every year. I appreciate the Commerce Department's support as we make this innovative industry even stronger."
Polar Semiconductor is a leader of the Minnesota CHIPS Coalition, formed by the GREATER Minneapolis–Saint Paul Partnership, the economic development partnership for the 15-county region, in late 2022 after the passage of the federal CHIPS and Science Act. Composed of more than 70 organizations, including manufacturers, supply-chain partners, education and training providers, labor organizations and state and local governments, the coalition is determined to reinvigorate the region's legacy in technology and establish the Midwest's semiconductor industry as a national leader.
"As a key leader in the Minnesota CHIPS Coalition, Polar Semiconductor is accelerating the growth of Minnesota's existing semiconductor and microelectronics industry with their investment in Bloomington," said Peter Frosch, President and CEO of the GREATER MSP Partnership. "Together with Polar and more than 70 organizations across industry, government, academia, and community, we have a shared ambition to double the size of the semiconductor and microelectronics industry in Minnesota by adding 10,000 more great jobs. The State of Minnesota's $250 million match funds for CHIPS, along with federal grants, makes us ready to scale the industry here in Minnesota."
Polar is leading the Minnesota CHIPS Coalition Workforce Partnership, in collaboration with semiconductor ecosystem companies, educational institutions, employment and training organizations, the Governor's Workforce Development Board (GWDB), and DEED to develop the high-tech manufacturing workforce of the next generation. Educational institution partners include the University of Minnesota, University of St. Thomas, Minnesota State College and University System, private technical colleges, and several high school systems in the state. The workforce partnership is already creating impact through training, upskilling, and apprenticeship programs, and will continue to build on its successful collaborative model, partially supported by investments from the State and CHIPS funding. $1.6 million of Polar's CHIPS award will be allocated towards its workforce development efforts. Additionally, the workforce partnership expects to leverage preeminent nationwide programs, for example SCALE (Indiana based DoD program), to boost and supplement local efforts.
"Bloomington has always been a place where innovation thrives. Polar Semiconductor's significant private investment in expanding its facilities, with potential direct funding from the CHIPS and Science Act and a substantial investment by the State of Minnesota, will boost our local economy and will contribute to the growth and vibrancy of semiconductor manufacturing in Bloomington," said Bloomington Mayor Tim Busse. "We're excited to see the tangible benefits of these investments right here in our city, bringing jobs and new opportunities for our workforce and community."
About Polar Semiconductor
Headquartered in Bloomington, Minnesota, Polar Semiconductor is a US-based manufacturer with more than 60 years of experience fabricating power semiconductor devices and sensors that serve automotive, consumer and industrial markets. Polar's semiconductor manufacturing facilities operate with state-of-the-art automation systems to manufacture Integrated Circuit (BCD, BiCMOS) and discrete (MOSFET, IGBT) 8-inch silicon wafers for the power and sensor markets. As an automotive qualified fab, Polar is committed to the highest levels of manufacturing and product quality. For more information, visit https://polarsemi.com. At the closing of the transactions contemplated in the definitive agreement, Polar will be majority owned by Niobrara Capital and Prysm Capital. Polar is currently jointly owned by Sanken Electric Co., Ltd. ("Sanken") (6707.T) and Allegro MicroSystems, Inc. ("Allegro") (NASDAQ:ALGM). Sanken and Allegro will maintain their investments in Polar, become minority owners, and continue their relationship as foundry customers.
About Niobrara Capital
Niobrara Capital is led by Chip Schorr, a pioneer in technology private equity investments. The firm focuses on new and innovative approaches to investing and building value for its stakeholders. For more information, please visit www.niobraracap.com.
About Prysm Capital
Prysm Capital is a growth equity firm focused on partnering with founders and management teams who are disrupting industries and building category-leading companies. With offices in New York, Princeton, and San Francisco, Prysm acts as a flexible source of growth capital for companies in the technology and consumer sectors. For more information, visit www.prysmcapital.com.
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