BETHLEHEM, Pa. — The Biden administration has finalized a contract worth up to $93 million that will create a state-of-the-art microchip packaging facility on the city's South Side.
The U.S. Department of Commerce announced Friday morning it has completed three previously disclosed deals worth a total of $143 million that are intended to increase domestic production of semiconductors. The largest of the three is its agreement with Infinera to construct a microchip manufacturing plant in San Jose, Calif. and a new test and packaging facility in Bethlehem.
“The bipartisan CHIPS and Science Act is a turning point for American innovation and manufacturing that is strengthening our economic and national security,” U.S. Secretary of Commerce Gina Raimondo said in a news release.
Infinera creates optical semiconductors that use light to transfer massive amounts of data at lightning speed. The chips enable computer networks to share information between continents, link data centers and empower artificial intelligence and machine learning.
The federal funding comes from the bipartisan CHIPS and Science Act, a $280 billion package intended to bolster domestic production of critical technology.
Infinera's semiconductors are constructed in California; many of them are sold directly to customers from there. Others are shipped to Upper Macungie Township, where they're tested and secured in specialized packaging to be used in fiber-optic products and other applications.
The new manufacturing plant is expected to increase Infinera's semiconductor production by up to ten fold, according to the department's release.
“This funding will accelerate delivery of U.S. photonic semiconductor innovations to meet the demands of critical network infrastructure in the era of AI," Infinera CEO David Heard said in a news release.
It's not clear how much of the federal funding is being split between the California and Bethlehem operations. It's also not clear how many of the resulting 500 manufacturing jobs and 1,200 construction jobs being created will end up in the Lehigh Valley.
Infinera has not commented on the future of its Upper Macungie Township facility, either. It currently employs about 300 people.
The federal funding comes from the bipartisan CHIPS and Science Act, a $280 billion package intended to bolster domestic production of critical technology. The COVID-19 pandemic revealed weaknesses in America's supply chain, and federal officials recognized the lack of semiconductors being manufactured in the United States posed an economic and national security threat.
The Biden administration first announced the deal as a non-binding agreement in October.
Former U.S. Rep. Susan Wild, D-Lehigh Valley, and former U.S. Sen. Bob Casey, D-Penn., had lobbied federal officials to invest in Infinera, but questions surrounded the deal's future. President-elect Donald Trump has been critical of the CHIPS spending, and it's unclear how his incoming administration will handle the program.
The Infinera package may be one of two CHIPS investments in the Lehigh Valley.
On Thursday, the department announced a non-binding agreement worth up to $79 million with Coherent. The deal would expand the size of the company's Palmer Township manufacturing plant to bolster production of silicon carbide substrates, materials used to make cutting-edge microchips that are more efficient than traditional ones.
