An Upper Peninsula electronics company plans to build a $51 million factory that will onshore a critical technology used by the aerospace and defense industries.
The project from Calumet Electronics won state support Tuesday, Oct. 24, when the Michigan Strategic Fund approved a $7.5 million grant and a tax break valued at $758,877.
Calumet Electronics, founded in 1968, is constructing a 60,000-square-foot factory that will produce organic substrates for the Department of Defense and other manufacturers. It is also partnering with Northrop Grumman, an aerospace and defense technology company, on the project.
“The company is diversifying to overall meet the needs of our nation’s defense,” said Vicki Schwab, the Michigan Economic Development Corp.’s managing director, regional prosperity in the Upper Peninsula.
The organic substrates, base materials, are integral for semiconductors, satellite technologies, power grids and smartwatches. There are no other major suppliers of advanced organic substrates in the United States.
“We therefore are squandering potentially $52 billion in CHIPS and Science money if we can’t have organic substrates onshore because our chips that we are developing here will have to go over to the Pacific Rim to be assembled,” said Meredith LeBeau, Calumet Electronics chief technology officer. “This creates a national and economic security issue, and we must address these challenges.”
With the development, Calumet Electronics will shift its focus to producing organic substrates. This marks a “sea-change” in Michigan manufacturing, a project memo said, and would create a “first-of-its-kind” facility in the United States. Calumet Electronics will be the only domestic source of these substrates for military and aerospace use.
LeBeau said the facility will “put Michigan on the map” as a “linchpin” for the semiconductor industry.
“It will likely be the only state to have this capability at capacity, creating a bold statement that yes it can be done in the United States and done by Yoopers nonetheless,” she said. “Being the only state to demonstrate organic substrate production will be a beacon of hope for the DoD and innovation that’s not previously available.”
The project will retain 269 jobs in Houghton County and upskill up to 40 positions.
Calumet Electronics is applying for Title III Defense Production Act contracts to support the new substrate factory. It’s competing with companies in New Hampshire and New York for the funding. The state grant will be used to match the defense department dollars.
If the contracts are secured, Calumet Electronics will become the first Department of Defense “trusted foundry” in Michigan. This program was designed to create a secure supply chain for vendors providing information technology to the military.
There are 81 trusted foundries in the United States.
“As a nation, we’ve learned very quickly that the U.S. is ill-positioned from the perspective of semiconductors manufacturing. We’ve seen that in commercial markets and consumer markets, but it goes much deeper and impacts our national security and defense sector overall,” said Mark Ignash, executive director of the Michigan Defense Center.
Calumet Electronics expects to begin construction on the new factory later this year with completion by summer 2024.
The Michigan Strategic Fund Tuesday also approved a $103 million tax credit for a Grand Rapids housing development. The Factory Yards project will redevelop a vacant warehouse into 467 apartments, commercial space, a food hall and more.
Michigan State University’s College of Human Medicine received a $3.4 million grant from the board to construct a three-story building in downtown Flint. The project will split an existing Flint Journal Building parcel, and the new building will be erected on a parking lot.
Denso, a global auto parts manufacturer, also won state support for its $63 million investment at its Battle Creek facility. The state board approved a 15-year tax break valued at $1.4 million to back Denso’s investment in a new electric vehicle product line.
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