Inside INdiana Business

Semiconductor manufacturer planning $1.8B Indiana plant, 750 jobs

WEST LAFAYETTE, Ind. (Inside INdiana Business) — Minnesota-based SkyWater Technology (Nasdaq: SKYT) on Wednesday announced plans to build a $1.8 billion semiconductor R&D and production facility in West Lafayette. The project is expected to create 750 jobs over five years.

SkyWater says the 600,000-square-foot plant will allow the company to respond to increasing demand for domestic manufacturing of microelectronics and will house advanced next generation fabrication facilities.

The facility, which will include 100,000 square feet of cleanroom space, will be located in the Discover Park District, the 400-acre mixed-use development adjacent to the Purdue University campus.

SkyWater CEO Thomas Sonderman says the project will depend on funding from the Creating Helpful Incentives to Produce Semiconductors for America, or CHIPS, Act introduced by Congress in 2020.

“Federal investment will enable SkyWater to more quickly expand our efforts to address the need for strategic reshoring of semiconductor manufacturing,” Sonderman said in written remarks. “Through the support and partnership of the Indiana Economic Development Corporation, we have a unique opportunity to increase domestic production, shore up our supply chains and lay the groundwork for manufacturing technologies that will support growing demand for microelectronics.”

Sonderman says while the company waits on the passage of the CHIPS Act, planning is already underway for the facility. He says once construction begins, it will take about 36 months to begin production.

Bloomberg reports the bill, which would provide $52 billion in funding for the American semiconductor industry, could be passed as early as next week. The Senate on Tuesday voted 64-34 to begin debate on the legislation.

SkyWater bills itself as the only U.S.-investor owned pure-play semiconductor and technology foundry. The company, which has 600 employees, went public in April 2021, raising about $97 million in its initial public offering.

The firm was previously part of San Jose, California-based Cypress Semiconductor, but became an independent company in 2017 when it was acquired by Oxbow Industries, a private equity firm headquartered in Minneapolis.

The company, which makes integrated circuits for customers including Infineon, D-Wave, Microsoft and Steifpower, lost $16.6 million in the first quarter on revenue of $48.1 million. Shares closed at $9.46 each Tuesday, down from their IPO price of $14.

A timeline for construction of the new facility was not provided. SkyWater says details for when hiring would begin in West Lafayette will be announced at a later date.

The Indiana Economic Development Corp. has committed up to more than $70 million in incentives for the project. They include up to $30 million in conditional tax credits and training grants, $20 million in redevelopment tax credits, up to $20 million in conditional structured performance payments, up to $500,000 in innovation vouchers, and $1 million Manufacturing Readiness Grants.

The IEDC says the incentives are performance-based, meaning SkyWater will be eligible to claim them once it makes eligible investments in innovation activities and employees are hired and trained.

Additional incentives have been offered by Purdue University, Greater Lafayette Commerce, the cities of Lafayette and West Lafayette, Tippecanoe County and Duke Energy.

“This investment will create hundreds of high-paying, good-quality jobs for the people of Indiana and will help secure our semiconductor supply chain here in the United States,” said U.S. Secretary of Commerce Gina Raimondo. “Semiconductors keep our cars on the road, our military jets in the air, and quite literally keep the lights on. Today’s announcement is a win for American economic and national security. It’s up to Congress to continue this momentum and fully fund the CHIPS Act so that we can continue to make announcements just like this one.”

The announcement comes less than a month after Purdue detailed a new partnership with Taiwan-based MediaTek to establish a Chip Design Center at the Convergence Center for Innovation and Collaboration in Purdue’s Discovery Park District.

SkyWater is no stranger to Indiana. The tech company announced plans in November to open research space at the WestGate@Crane Technology Park in Odon. The company is a U.S. Department of Defense-accredited supplier, which prompted it to open a facility near the Naval Surface Warfare Center, Crane Division.

During the Global Economic Summit in May in Indianapolis, the state announced the creation of the Accelerating Microelectronics Production & Development task force, designed to strengthen Indiana’s role in semiconductor manufacturing through procurement of new projects and federal funding.

Also in May, Purdue announced the launch of its Semiconductor Degrees Program, a suite of degrees and credentials for both graduate and undergraduate students.