U.S. Government Subsidy for Akash Systems

By David Shepardson

(Reuters) – The U.S. Commerce Department announced on Wednesday a commitment of up to $18.2 million in government subsidy funding to Akash Systems for the construction of a 40,000-square-foot cleanroom for advanced semiconductor manufacturing.

This funding comes from the $52.7 billion semiconductor manufacturing and research subsidy program, which will be paired with investments from California-based Akash, venture capital firms, and other private investors to support a $121 million investment in West Oakland, California. This investment aims to manufacture various Diamond Cooling substrates, devices, and systems at scale.

Akash is leveraging its Diamond Cooling technology to enhance thermal management in AI-focused data centers.

Felix Ejeckam, CEO of Akash Systems, stated, "As a U.S. company developing next-generation semiconductor technology, this validates our vision and strategy, helping us deliver cutting-edge solutions that address thermal challenges in today's high-performance computing and communication systems."

In November 2023, the IUE-CWA workers union and Akash Systems announced labor agreements for both construction and production workers, including a first-of-its-kind labor neutrality agreement for semiconductor production workers in West Oakland.

Commerce Secretary Gina Raimondo remarked that the Akash award ensures “the United States is a global leader in every part of the semiconductor supply chain.”

The Commerce Department has allocated around $36 billion in preliminary agreements to about 20 companies through the bipartisan 2022 Chips and Science Act, an initiative designed to draw chipmakers from Asia to expand U.S. production.

To date, the only finalized deal was with Polar Semiconductor for $123 million to expand and modernize a chip fab in Bloomington, Minnesota. Polar agreed to a five-year ban on stock buybacks and an upside-sharing agreement that necessitates sharing excess profit with the government as a condition for funding.

The Commerce Department is under pressure to finalize substantial awards ahead of President-elect Donald Trump's inauguration in January. Reuters has reported that Taiwan Semiconductor Manufacturing Co, GlobalFoundries (NASDAQ:GFS), and at least another chipmaker are awaiting their final chips awards from the Biden administration.