Report: U.S. Prepping $540 Million for SK Group Semiconductor Factory in Michigan

Matt Posky
by Matt Posky

The United States Department of Energy has confirmed plans to loan $544 million to South Korean tech conglomerate SK Group under the conditions it be used to expand semiconductor production in the Midwest. Finances have been earmarked for a facility operated by subsidiary SK Siltron CSS to expand a plant located in Bay City, Michigan, which had previously expressed plans to build more chips.


Demand has ballooned for silicon carbide semiconductors within the automotive sector in recent years. Like most other modern products, vehicles have become heavily reliant on semiconductor chips in recent years and the supply chain issues witnessed since 2020 have been vexing the industry. Meanwhile, the United States is concerned that any future decisions on the part of China to invade Taiwan would effectively cripple the U.S. capability to manufacture everything from automobiles to military hardware.


According to the Department of Energy’s Loan Program Office, the planned expansion of the SK Group facility would make the site one of the world’s largest producers of silicon carbide wafers on the planet. Considered a matter of national security by the federal government, increasing the factory’s capacity to produce chips is something the Biden administration is keenly interested in. As a bonus, the program should also free up chips for automakers — especially in regard to electric vehicles.


Automotive News quoted SK spokesperson Kelsey Flora as saying that the loan would “enable larger growth and expanded capacity than originally projected” in addition to new employment opportunities.


From Automotive News:


According to the Department of Energy, SK's project is expected to result in 200 jobs once at full production, in addition to about 200 construction jobs.
SK purchased DuPont's silicon carbide business in 2020 for $450 million and subsequently said it would invest more than $300 million to quadruple its Michigan footprint with a 250,000-square-foot plant in Bay City.
In 2022, SK Siltron held a ribbon cutting for the new plant, part of a larger commitment by the company to increase its U.S. investments and assets to more than $50 billion by the end of 2025.


There have been some concerns that the loan is unnecessary or perhaps needlessly advantageous to a company of foreign origin. But the United States is understandably desperate to localize chip production with the Biden administration making it a key platform. Meanwhile, Michigan is desperate to secure tech and manufacturing jobs. Despite being synonymous with the Northern United States since before the Civil War, factory work has either been shifting to the South or completely out of the country entirely for decades.


Incentivizing companies to lay roots in Michigan after the 2008 recession has worked out rather well. The plan allowed the region to recoup manufacturing jobs a little faster than the national average. This includes the automotive sector, even though manufacturing jobs not directly tied to the auto industry have technically kept a higher pace. SK has tried to lean into that by asserting that it’s very serious about turning the facility into one of the largest semiconductor producers in the world and seems to have convinced those responsible for government oversight.


“This will not be a compliance facility," Jigar Shah, director of the Loan Programs Office, explained. "It's going to be a cutting-edge, next-generation facility."


Shah also noted that federal loans for clean-energy projects had seen renewed interest since 2023 after a period of inactivity thanks to money being freed up for companies promising to conduct clean-energy projects via the passing of the Inflation Reduction Act and Bipartisan Infrastructure Law. However, critics of the scheme remain concerned that such provisions are advantaging too many foreign entities and argue that promises of projects being environmentally sound does not necessarily make the claim true.


"I think we spent the better part of the past three years overcoming dormancy," Shah said. "It was a big deal to get us to this point where companies respect our process and equity investors respect our diligence."


The SK chip agreement was said to be one half of a pair that were announced on Thursday by the Loans Program Office. The other is a $165.9 million loan intended to finance the expansion of American Battery Solutions. That deal has likewise been approved by the Department of Energy, hopefully strengthening Midwestern EV battery production. The company is targeting 4.2 GWh worth of lithium-ion battery packs annually by 2026.


[Image: U.S. Department of Energy]

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Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Dartdude Dartdude on Feb 24, 2024

    The only problem I have if there is a big demand for chips why aren't there investors lining up to invest? If smart money is not jumping at this then there must be a reason and when all these new semi-conductor plants are up and running will there be a glut. Notice how the government invests in businesses that help a select segment of the population and not the general population. Follow the money, remember that the government DOESN"T have its own money, its money stolen through taxation.

    • Tassos Jong-iL Tassos Jong-iL on Feb 25, 2024

      Bd2 - I hope you receive your undying wish for China to invade Taiwan for we know nothing will ever make you happier, Dear Child of the Red One Korea.

  • Lorenzo Lorenzo on Feb 24, 2024

    Why aren't American firms trying to grab some of that loot, er, tax money? Either way, it's nice of them to create American jobs so people can earn back some of their tax money - after taxes, of course.

  • Jkross22 It very much depends on the dealer. Just bought a replacement for the CX9. A local dealer gave a $500 discount on a CPO car while another one gave a few thousand dollar discount but was out of the area and we had to drive 5 hours to get. The local dealer still seems to think it's 2022 and cars appreciate when sitting on the lot. I wish them luck.
  • Ajla "and the $34K price doesn't seem too steep." Respectfully disagree. This would be okay at $29K. $34k clangs into way too much.
  • FreedMike i puUut pUniZhR sTikKr oNn mY KoMMpAs aNd nOW i hEeR Eegle SkReem. (And no one knows it's made in Mexico.)
  • SCE to AUX What a farce.Besides, "patriotism" has been redefined a hundred different ways in the last 20+ years. Disagree with one of them, and you're a traitor.And for starters, Jeep is a Stellantis brand with its HQ in the Netherlands. If this persistent myth about patriotism is ever cracked, the brand is doomed.
  • MaintenanceCosts I'm definitely seeing more dealer-level discounts than I did a year ago, but not a lot of lower MSRPs.
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