BETHLEHEM, Pa. — A Lehigh Valley tech company has signed a tentative agreement with the federal government that could lead to the construction a state-of-the-art testing and packaging facility in South Bethlehem.
Under a nonbinding, preliminary agreement announced Thursday morning, the Biden administration inked a $93 million deal with Infinera, a California-based semiconductor company with a specialized facility in Upper Macungie Township.
The money would be sourced from the CHIPS and Science Act, a bipartisan 2022 law intended to bolster America's production of high-tech resources such as semiconductors.
Under the deal, Infinera would use the money to construct a new fab and foundry for the construction of indium phosphide semiconductors in San Jose. The new facility, which would include 40,000 square feet of cleanroom space, would allow the company to increase its semiconductor output tenfold, according to a press release from the Department of Commerce.
Use of microchips
Infinera's microchips are used by telecommunication devices to transfer large amounts of data through light. They're used for broadband, lidar and lasers by consumers like the U.S. Department of Defense, Netflix and AT&T. The tech giant Nokia announced its intention to purchase Infinera for $2.3 billion over the summer.
While many of Infinera's chips are sold directly to consumers for fiber optic networks and data centers, some are shipped to the Lehigh Valley. Here, they're packaged into specialized casings that protect them from heat, vibrations, contaminants and other threats.
The Upper Macungie Township facility is one of the few in the United States, and the proposed Bethlehem facility would allow it to bolster domestic and international supply chains, according to the release.
Don Cunningham, president and CEO of the Lehigh Valley Economic Development Corp., said talks have been in the works for some time for Infinera to expand its Lehigh Valley presence and build a facility in South Bethlehem.
He said he was not at liberty to disclose more details such as the exact location pending the negotiations.
If completed, the deal would create 500 new manufacturing jobs and 1,200 new construction jobs between the San Jose and Bethlehem facilities, according to the Department of Commerce.
It was not immediately clear how those jobs or federal funding would be split between the two facilities. It was also not clear if the Bethlehem facility would replace the Upper Macungie Township structure — it employs about 300 — or serve as a second operation in the region.
"The proposed CHIPS funding would enable us to better secure our supply chain and compete more effectively with foreign adversary nations."David Heard
"We are grateful for the bipartisan efforts under the CHIPS and Science Act to increase semiconductor fabrication and packaging in the U.S. and protect our national and economic security," Infinera CEO David Heard said in the release. "The proposed CHIPS funding would enable us to better secure our supply chain and compete more effectively with foreign adversary nations."
Lehigh Valley tech sector
For the Lehigh Valley, LVEDC's Cunningham said the project is a natural extension of the region’s technology sector that actually got its start decades ago.
“This has been a real growth sector in the country – and the Lehigh Valley. We have this legacy going back to Bell Labs, Western Electric and the development of the first transistors that has been here,” he said. “But this is the first spurt of growth we’ve seen since a lot of that production got moved to Asia 10 or 15 years ago.”
Already the Lehigh Valley has about 30 companies in the semiconductor space, employing about 1,500, according to Cunningham.
He said the Infinera project is among others in the works.
“This federal CHIPS Act has been really a catalyst for us,” he said. “We have three semiconductor projects that are advancing. Hopefully all of them will come to fruition.”
More early-stage companies are in development through the Ben Franklin Technology Partners incubator in Bethlehem, he said.
“Strategically, we see the Valley can be a part of this growth and help it to grow more. This Infinera piece is a big step.”
CHIPS Act
Federal lawmakers crafted the CHIPS and Science Act after the COVID-19 pandemic exposed weaknesses in the nation's supply chain. While semiconductors were first invented in the United States and mass-produced in Allentown's Western Electric labs, their production has largely shifted overseas. But the chips are critical for modern electronics and emerging technology such as artificial intelligence, making a stateside source a matter of national security.
"The Biden-Harris administration is taking meaningful steps towards achieving the economic and national security goals of the CHIPS and Science Act with proposed investments like this one, which will help us secure semiconductor manufacturing projects and create high-tech jobs across the country," U.S. Secretary of Commerce Gina Raimondo said in the release.
Pennsylvania politicians including U.S. Sen. Bob Casey, D-Penn., and U.S. Rep. Susan Wild, D-Lehigh Valley, had previously gone to bat for Infinera. It was part of a consortium of Lehigh Valley businesses, governments and colleges that applied for a $75 million grant to build a tech hub in the region, but the group walked away empty handed in 2023.
Heard, the Infinera CEO, previously said that federal investment in his company through the CHIPS Act would be a way to push back on China's growing dominance in the semiconductor industry.
"Our number one competitor is Huawei in China," Heard told LehighValleyNews.com last year. "They're spending at 50 times our rate and it's sponsored by the Chinese government. This is a great way to help accelerate technology."
