US to award Akash Systems up to $18.2 million for chips production

6:03 am Wednesday, November 13th, 2024

By David Shepardson

(Reuters) – The U.S. Commerce Department said Wednesday it has agreed to provide up to $18.2 million in government subsidy funding to Akash Systems to support the construction of a 40,000-square-foot cleanroom space for advanced semiconductor manufacturing.

This proposed funding from the $52.7 billion semiconductor manufacturing and research subsidy program, will be combined with funding from California-based Akash, venture capital firms, and other private investors, to support a $121 million investment in West Oakland, California to manufacture various Diamond Cooling substrates, devices and systems at scale.

Akash is utilizing its “Diamond Cooling” technology to improve thermal management with AI-focused data centers.

“As a U.S. company developing next-generation semiconductor technology, this validates our vision and strategy, helping us to deliver cutting-edge solutions that address thermal challenges in today’s high-performance computing and communication systems,” Akash Systems CEO Felix Ejeckam said in a statement.

In November 2023, the IUE-CWA workers union and Akash Systems announced labor agreements covering both construction and production workers, including a first-in-the-industry labor neutrality agreement for semiconductor production workers in West Oakland.

Commerce Secretary Gina Raimondo said the Akash award would help ensure “the United States is a global leader in every part of the semiconductor supply chain.”

The Commerce Department has awarded around 20 companies about $36 billion in preliminary agreements through the bipartisan 2022 Chips and Science Act, aimed at luring chipmakers out of Asia to expand production in the U.S.

So far, the only finalized deal went to Polar Semiconductor for $123 million to expand and modernize a chip fab in Bloomington, Minnesota.

Polar agreed to a five-year ban on stock buybacks and to an upside sharing agreement that requires sharing excess profit with the government as a condition of the funding.

The Commerce Department is racing to finalize major awards before President-elect Donald Trump takes office in January. Reuters reported last week that Taiwan Semiconductor Manufacturing Co, GlobalFoundries and at least one other chipmaker are poised to receive their final chips awards from the Biden administration.

(Reporting by David Shepardson; Editing by Rashmi Aich)