The US plans to award a $162 million award to Microchip Technology to boost production. The U.S. Commerce Department announced on Thursday that it intends to provide government funds totaling $162 million to Microchip Technology (MCHP.O) to increase the country’s manufacturing of semiconductors and microcontroller units (MCUs), which are essential to the defense and consumer industries.

According to authorities, the funding would enable Microchip to quadruple manufacturing microcontroller units and mature-node semiconductor chips at two U.S. plants.

Cars, washing machines, cellphones, internet routers, airplanes, and the defense-industrial base depend on these components.

According to Commerce Secretary Gina Raimondo, the grant “is a meaningful step in our efforts to bolster the supply chain for legacy semiconductors that are in everything.”

The announcement coincides with U.S. efforts to replace Chinese and other foreign suppliers as the primary source of these chips.

Congress authorized the $52.7 billion “Chips for America” initiative in August 2022 to fund semiconductor research and manufacture. The award, which has not yet been finalized, is the second of the program.

The first award was made in December and went to a BAE Systems (BAES.L) factory to build semiconductors for fighter jets. The amount was $35 million.

According to authorities, reliance on imports will be reduced with the anticipated award to Microchip, which consists of $90 million to develop a fabrication plant in Colorado and $72 million to construct a facility of a similar nature in Oregon.

According to Lael Brainard, head of the White House National Economic Council, the chips are essential for the American automotive, commercial, industrial, defense, and aerospace sectors.

The honor will lessen the “dependence on international supply chains that caused price spikes and lengthy lineups for everything from cars to washing machines during the pandemic,” according to Brainard.

Microchip CEO Ganesh Moorthy praised the prize in a statement, calling it “a direct investment to strengthen our national and economic security.” This follows Microchip’s early 2023 announcement of intentions to invest $800 million to increase semiconductor manufacturing at its Oregon location.

The U.S. corporations’ sourcing practices for so-called legacy chips, or current-generation and mature-node semiconductors, were to be surveyed, the Commerce Department said in January.

The study aims to “reduce national security risks posed by” China. It will concentrate on the sourcing and usage of legacy chips built in China in the supply chains of vital U.S. U.S.Raimondo told Reuters last month that she anticipated awarding around twelve grants totaling billions of dollars in 2024, which could significantly alter the direction of U.S. chip manufacturing.