The U.S. Commerce Department announced on Tuesday that it has finalized a $123 million grant for Polar Semiconductor to enhance its facility in Minnesota, enabling the company to nearly double its production capacity for power and sensor chips in the United States.

This grant is part of the Biden administration's broader $52.7 billion initiative aimed at supporting semiconductor manufacturing and research. It marks the first finalized award under this program. The distribution of funds will be contingent upon Polar meeting specific project milestones.

Commerce Secretary Gina Raimondo emphasized that this funding will facilitate the establishment of a new U.S.-owned foundry dedicated to sensor and power semiconductors, increasing Polar's output from approximately 20,000 wafers per month to 40,000, thereby addressing the demands of the aerospace, automotive, and defense sectors.

Before finalizing any awards, the department must complete its due diligence process.

Lael Brainard, a senior economic adviser at the White House, indicated on Monday that this grant is expected to be the first of many to be finalized in the near future.

Raimondo further noted, "You will begin to see more awards like this, with funds allocated to companies in the upcoming weeks and months."

The 2022 chips legislation, advocated by President Joe Biden, seeks to enhance U.S. competitiveness against China and significantly increase domestic chip production. This legislation also includes a 25% investment tax credit for constructing chip manufacturing facilities, which is projected to be valued at $24 billion.

In a related development, Congress approved legislation on Monday aimed at streamlining federal permitting processes for semiconductor manufacturing projects.