The U.S. Department of Commerce announced a multibillion-dollar funding to semiconductor manufacturer Micron Technology as part of an effort to boost the country’s production capabilities in the sector.

The federal department will award Micron $6.165 billion in funding under the CHIPS Act of 2022. A Dec. 10 statement from the agency reads, “This funding will support the first step in Micron’s two-decade vision to invest approximately $100 billion in New York and $25 billion in Idaho, which will create approximately 20,000 jobs and will help the U.S. grow its share of advanced memory manufacturing from less than 2 percent today to approximately 10 percent by 2035.”

Micron is expected to spend about $50 billion in the United States by 2030. The multibillion-dollar funding will be disbursed based on Micron attaining certain project milestones.

The department said the investment will boost domestic supply of DRAM chips, which are common memory chips used in personal computers, servers, and workstations. They are also used in artificial intelligence, high-performance computers, industrial applications, and are “foundational to all advanced technologies,” according to U.S. Secretary of Commerce Gina Raimondo.

“With this investment in Micron, we are delivering on one of the core objectives of the CHIPS program—onshoring the development and production of the most advanced memory semiconductor technology, which is crucial for safeguarding our leadership on artificial intelligence and protecting our economic and national security,” Raimondo said.

In addition to the $6.165 billion, the Commerce Department also signed a nonbinding memorandum with Micron for up to $275 million in funds for the company’s proposed modernization and expansion of its Virginia facility in Manassas.

Micron is set to shell out $2 billion for the project. The Manassas facility will produce legacy DRAM memory chips crucial for industrial and auto markets. The project is expected to add 400 manufacturing jobs.

The news of government funding did not have an immediate impact on Micron’s shares on Dec. 10 as the stock dipped by more than 6 percent. The stock was up 2.74 percent as of 1:00 p.m. EST on Dec. 11. Year to date, the stock is up by more than 22 percent.

Domestic Manufacturing Push

The CHIPS Act has provided the Commerce Department with $50 billion in funding to enhance the capabilities of the U.S. semiconductor industry. More than $32 billion has been allocated to date in proposed funding for projects spread across 16 states.

The department recently awarded up to $7.865 billion in funding to Intel. The funding supports $90 billion in investments expected from the company by the end of 2030. The grant will aid Intel’s projects in Arizona, Ohio, Oregon, and Mexico. The agency said it will boost America’s capacity for leading-edge chips.

“Leading-edge chips power the most sophisticated technology on the planet, including developing AI and building critical military capabilities. Intel’s process technologies, such as Intel 18A and advanced packaging technologies, combined with its foundry services, would strengthen the domestic supply of these advanced chips,” the Commerce Department stated.

Last month, the agency also awarded up to $35.5 million in direct funding to BAE Systems Electronic Systems as well as $23.9 million for Rocket Lab. The grants were made under a CHIPS program aimed at backing commercial fabrication facilities.

BAE Systems will use the funds to modernize its Microelectronics Center in Nashua, New Hampshire, a facility accredited by the Defense Department. The modernization effort will enable the company to boost production of monolithic microwave integrated circuit chips by about four times. These chips are “critical components for advanced military aircraft and commercial satellite systems,” the Commerce Department stated.

Rocket Lab plans to implement the funds to build a “more robust and resilient supply of space-grade solar cells that power spacecrafts and satellites,” according to the Department of Commerce. The company’s solar cells are used in American space programs.

The push for domestic semiconductor manufacturing comes as the United States and the European Union have raised concerns about China’s attempts to become a dominant force in the legacy semiconductor space.

Legacy semiconductors are chips manufactured using mature technologies that are a decade or two old. These chips are equal to or larger than 28 nanometers in size and typically are used in household appliances and consumer electronics.

“We know that based on China’s own reporting, about 60 percent of all new ‘legacy’ chips coming to the market in the next handful of years will be produced by China,” Raimondo said during a press conference in April.

“And we know there is a massive subsidization of that industry on behalf of the Chinese government, which could lead to huge market distortion, and so that’s why we’re focused on it.”