On Monday, October 21, the U.S. Department of Commerce announced its plan to allocate $325 million to Hemlock Semiconductor Group to significantly expand their production capacity of semiconductor-grade polycrystalline silicon. Polycrystalline silicon is a crucial material for producing computer chips, and the company is seeking to transform the chip supply chain.
This funding from the “Chip and Science Act,” signed into law by President Biden in 2022, aims to strengthen domestic chip manufacturing in the United States, enhance U.S. competitiveness, and bolster the economy and national security.
The government funding will support the construction of a new manufacturing plant for the company on the existing Hemlock site in Michigan.
Commerce Secretary Gina Raimondo stated, “Polycrystalline silicon is the cornerstone of semiconductors, and having a reliable source of materials is essential for producing chips that support our economy and national security.”
Chips manufacturing has evolved from a business competition between companies to a global technological arms race and geopolitical battle among multiple countries due to China’s use of chip technology to advance its military ambitions. Chip production is an extremely complex and high-risk industry, with key technologies such as chip fabrication being among the most minute yet sophisticated in history.
On the other hand, China’s relentless pursuit of acquiring chip technology for developing military and surveillance capabilities poses national security risks to the United States, Japan, and even European countries, turning chip acquisition into a geopolitical weapon.
Polycrystalline silicon has become a battleground in the U.S.-China chip war. The Office of the U.S. Trade Representative (USTR) announced on September 19 its plan to significantly increase import tariffs on Chinese polycrystalline silicon, wafers, and tungsten products, soliciting public opinions.
USTR mentioned that China currently dominates the global production capacity of polycrystalline silicon and wafers, accounting for 93% of polycrystalline silicon manufacturing and 95% of wafer capacity.
“The advantage China holds in wafer and polycrystalline silicon manufacturing may weaken new investments in U.S. manufacturing, impact the resilience of U.S. solar cell and semiconductor supply chains, and diminish the effectiveness of solar cell and semiconductor tariffs,” USTR stated.
Established in 1961, Hemlock Semiconductor is the only U.S.-based manufacturer of ultra-pure polycrystalline silicon, producing the level of purity required for cutting-edge semiconductor markets. Currently, there are only five companies globally reaching this level of purity.
Hemlock Semiconductor expressed that this is a rare investment opportunity, intending to use it for advanced technologies to continue being a top-tier supplier of polycrystalline silicon in the cutting-edge semiconductor market.
The Biden administration has provided billions of dollars in subsidies to major chip manufacturers such as Intel, TSMC, Samsung, and Micron, aiming to secure a stable supply of polycrystalline silicon to meet the growing production demand.