Biden-Harris Administration Announces Preliminary Terms with Infinera to Support Development of Semiconductor Technology Important for Communications and National Security

Today, the Biden-Harris Administration announced that the Department of Commerce and Infinera have signed a non-binding preliminary memorandum of terms (PMT) to provide up to $93 million in proposed direct funding under the CHIPS and Science Act. Through this bipartisan legislation, President Biden and Vice President Harris are revitalizing America's semiconductor manufacturing industry while strengthening domestic supply chains, creating good-paying jobs, and helping to secure America's technological leadership on the world stage. The proposed CHIPS funding would support the construction of a new fab in San Jose, California, and a new advanced test and packaging facility in Bethlehem, Pennsylvania. The proposed projects would be expected to increase Infinera's existing domestic manufacturing capacity by an estimated factor of 10 and would create up to approximately 500 manufacturing jobs and 1,200 construction jobs.

"From artificial intelligence to electric vehicles to telecommunications infrastructure, 21st century technologies all rely on optical semiconductors like the ones manufactured by Infinera," said U.S. Secretary of Commerce Gina Raimondo. "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."

Infinera is a vertically integrated semiconductor and telecommunications equipment manufacturer that has operated its U.S. fabrication and advanced test and packaging facilities for over 20 years. As the United States becomes more reliant on larger amounts of data driving increased energy usage, Infinera's indium phosphide-based photonic integrated circuits (InP PICs) are increasingly important, using light to transfer information with greater energy efficiency. The PICs and optical modules are key components in optical network communications. These components enable the fast and reliable transfer of large amounts of data in communications, spanning short- to long-distance broadband networks; between AI and machine-learning clusters inside the data center; and between data centers.

"Thanks to President Biden's CHIPS and Science Act and his Investing in America agenda, we are onshoring state-of-the-art semiconductor manufacturing and investing in job creation across the country," said Natalie Quillian, White House Deputy Chief of Staff. "Today's announcement demonstrates how CHIPS is directly supporting critical sectors like artificial intelligence and telecommunications, while creating jobs and economic opportunity in Bethlehem, PA and San Jose, CA."

"The Biden-Harris Administration continues to deliver on making proposed investments up and down the semiconductor supply chain and across the United States," said Under Secretary of Commerce for Standards and Technology and National Institute of Standards and Technology Director Laurie Locascio. "As a result of this proposed investment in California and Pennsylvania, the United States would have an increased supply of a technology that is an important component of advanced and secure communications, with up to approximately 1,700 new jobs."

Furthermore, as a leading U.S.-based manufacturer of these chips, Infinera's capabilities are important for America's economic and national security. The projects would allow Infinera to increase the domestic fabrication and advanced test and packaging of InP PICs for the Department of Defense, Intelligence Community, law enforcement, and national security agencies for secure communications and emerging technologies such as quantum technology, sensing, and LiDAR.

With this proposed CHIPS funding, Infinera would be able to expand its capacities in two locations:

• San Jose, California: Construct a new, modernized fab and foundry with over 40,000 square feet of cleanroom space to increase its InP PIC manufacturing to meet future capacity and capability demands. With this construction, Infinera is estimated to increase its production capacity by a factor of 10.
• Bethlehem, Pennsylvania: Construct a new, state-of-the-art advanced test and packaging facility focused on meeting the increasing demand for InP PICs. As one of the only advanced test and packaging facilities dedicated to packaging InP PICs in the United States, this project would also help bolster the domestic and global packaging supply chains while keeping a domestic packaging base for Infinera's defense and intelligence customers and the commercial and AI sectors. Additionally, this facility would include dedicated R&D space focused on newer optical packaging technologies, such as 2.5D and 3D packaging and co-packaged optics.

"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," said Infinera CEO David Heard. "The proposed CHIPS funding will enable us to better secure our supply chain and compete more effectively with foreign adversary nations. Our unique photonic semiconductors address the increased demand for bandwidth from consumers while opening new markets inside the data center driven by the explosive growth in AI workloads."

In California, Infinera has signed a PLA with Nor Cal Carpenters Union (NCCU). Additionally, for trades not covered by NCCU, Infinera's general contractor, Vulcan Construction, has agreed to hire from a contractor base consisting of 100% labor union-signatory contractors affiliated with the building trades. In Pennsylvania, Infinera plans to utilize a PLA and partner with the Lehigh Valley Building Trades for the construction of its new advanced test and packaging facility.

To recruit, train, and develop facility workforces, Infinera has partnered with the SEMI Foundation on its efforts to build a diverse and skilled community of workers. Infinera is a founding member company of the SEMI Career and Apprenticeship Network (SCAN) program, and an active participant in their Semiconductor and Nanotechnology Apprenticeship Pioneers (SNAP) program, one of the first Registered Apprenticeship (RA) programs in California. Other partners in this program include Foothill College (part of the Foothill-DeAnza Community College District), Mission College, the work2future and NOVAWorks workforce boards, and the National Institute for Industry and Career Advancement (NIICA). Infinera plans to extend RA programs in Pennsylvania and increase access for economically disadvantaged individuals who want to gain experience in the semiconductor industry and benefit from these inclusive training opportunities.

Infinera offers a Dependent Care Flexible Spending Account (DCFSA) to enable its employees to set aside up to $5k a year pre-tax money to use on qualified dependent care expenses. In response to the CHIPS Act, Infinera is also partnering with Care.com to offer company-paid subscriptions to all U.S. employees. Additionally, in California, Infinera's PLA partner, NCCU, recently implemented a parental leave benefit for mothers, and is offering a childcare assistance program via the State Equal Representation in Construction Apprenticeship (ERiCA) Grant received from the California Department of Industrial Relations. The goal of the ERiCA Grant is to support women, non-binary, and underserved communities interested in a rewarding career in the building and construction industry. The grant allots apprentices up to $10k and pre-apprentices up to $5k, per year, respectively.

Infinera is committed to achieving 100% renewable energy by 2030 at all U.S. locations and prioritizes sustainable water management in their semiconductor production. The company utilizes on-site treatment systems to ensure responsible water discharge and processes that are optimized for water efficiency, uses water-saving technologies, and participates in recycled water programs for irrigation. Through these water management processes and other conservation measures, Infinera achieved a 15% reduction in water consumption. Additionally, Infinera's current operations in San Jose are 95% carbon free, which is expected to continue with the expansion of the Fab.

The company has indicated that it plans to claim the Department of the Treasury's Investment Tax Credit, which is expected to be up to 25% of qualified capital expenditures.

As explained in its first Notice of Funding Opportunity, the Department of Commerce may offer applicants a PMT on a non-binding basis after satisfactory completion of the merit review of a full application. The PMT outlines key terms for a potential CHIPS incentives award, including the amount and form of the award. The award amounts are subject to due diligence and negotiation of award documents and are conditional on the achievement of certain milestones. After a PMT is signed, the Department of Commerce begins a comprehensive due diligence process on the proposed projects and continues negotiating or refining certain terms with the applicant. The terms contained in any final award documents may differ from the terms of the PMT being announced today.

About CHIPS for America
CHIPS for America has allocated over $36 billion in proposed funding across 19 states and proposed to invest billions more in research and innovation, which is expected to create over 125,000 jobs. Since the beginning of the Biden-Harris Administration, semiconductor and electronics companies have announced over $400 billion in private investments, catalyzed in large part by public investment. CHIPS for America is part of President Biden and Vice President Harris's economic plan to invest in America, stimulate private sector investment, create good-paying jobs, make more in the United States, and revitalize communities left behind. CHIPS for America includes the CHIPS Program Office, responsible for manufacturing incentives, and the CHIPS Research and Development Office, responsible for R&D programs, that both sit within the National Institute of Standards and Technology (NIST) at the Department of Commerce. Visit https://www.chips.gov to learn more.

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