SK Siltron CSS puts Bay County at the forefront of nation’s growing appetite for semiconductor chips

This is the first in a series of articles about SK Siltron CSS and what its investment in Bay County means for the Great Lakes Bay Region. On March 23, Route Bay City highlights Rose Dugan, a quality assurance operator working at the facility.

Thanks to the $300 million investment in semiconductor wafer manufacturing in Monitor Township, there’s now a little bit of Bay County powering electric vehicles and other high-tech devices across the nation.

To meet the unprecedented global demand for silicon carbide wafers used to make semiconductor chips, SK Siltron CSS in the last year doubled its Bay County workforce to 240 employees and constructed a second manufacturing facility in Valley Center Technology Park.

And this may just be the beginning.

SK Siltron CSS CEO Jianwei Dong said the company plans to increase production capacity sixteenfold by 2025 and expand its employee base to support the proliferation of electric vehicles — and the semiconductor chips that power them.

“We are transforming the world through sustainable compound semiconductor solutions made right here in the Great Lakes Bay Region,” Dong said.

SK Siltron CSS is a U.S. subsidiary of SK Siltron, one of the world’s largest silicon wafer suppliers, based in South Korea. 

The Monitor Township site, formerly home of F.P. Horak, is the company’s second location in Bay County. In 2019, SK Siltron acquired DuPont’s silicon carbide wafer unit in Williams Township for $450 million. That site is now used for SK Siltron CSS research and development, along with wafer manufacturing.

The company selected Michigan for its new facility over competing states because of its skilled regional workforce and proximity to leading automakers, Dong said.

“Our parent company is a very serious investor, and they understand they have to be aggressive to win,” said Matthew Gave, research and development manager. “It’s refreshing and rewarding to work for a company that allows us to hire the people needed to do things the right way.”

Monitor Township Supervisor Terry Spencer said he’s hopeful other companies will follow suit, bringing strong businesses and good jobs to the area.

“I truly believe the whole landscape is going to be significant changed out there in the next 10 years,” Spencer said. “That will benefit the community and the people who live here.”

SK Siltron’s investment in Bay County further boosts the state’s leadership role in the national semiconductor supply chain, state leaders said. The semiconductor industry contributes $4.6 billion in total gross regional product for Michigan and is among the top states in the nation for semiconductor manufacturing.

Michigan’s semiconductor workforce also ranks among the top 10 in the nation, with job growth projected to increase by at least 11% over the next five years, according to the Michigan Economic Development Corporation (MEDC).

“SK Siltron’s commitment to Michigan will help us bring the semiconductor supply chain home, cut down shortages and delays, and create good-paying jobs for Michiganders in Bay City,” said Gov. Gretchen Whitmer at the manufacturing facility’s ribbon-cutting ceremony in September.

The company’s silicon carbide wafer production is underway in Monitor Township, with plans to reach full capacity by 2025, Gave said.

SK Siltron worked with many partners on its expansion efforts, both at the local and state level.

“The exceptional people of Bay City and our strong local partners are the reason we were able to expand so aggressively in the area. The support we have received is truly unmatched,” Dong said.

Bay Future, Inc., a countywide economic development organization, was one of those local partners working closely with the company and state and local government to secure the investment and job creation this project brings to the community.

The Michigan Strategic Fund Board granted a $1.5 million Michigan Business Development Program grant for the project, according to Bay Future. It also approved a 50% tax exemption for up to 15 years of the State Essential Services Assessment required of manufacturers that do not pay personal property tax on eligible property. The exemption is estimated at $2.244 million.

Additionally, Monitor Township approved a real property tax abatement in support of the project in conjunction with an MEDC-approved state education tax abatement.

Bringing chip manufacturing back to U.S.

Semiconductor chips have myriad applications in today’s world of electronics.

But the global chip shortage, exacerbated by the pandemic and supply chain issues with overseas manufacturers, has impacted people and industries from auto manufacturing to consumer electronics, home appliances, medical devices, agriculture, defense and more.

Only 10% of the world’s semiconductor chips are made in the United States today, according to the White House.

In hopes of making the U.S. less reliant on foreign chip suppliers, a bipartisan group of lawmakers last year passed the CHIPS and Science Act, which pledged $52.7 billion to expanding American semiconductor research, development and production, as well as $24 billion or more in tax credits.

The Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022, or CHIPS Act, is one of the biggest infusions of taxpayer dollars into a single industry in decades, officials said.

Its goal is to catalyze billions more in private sector semiconductor investment across the nation.

Just months after the CHIPS Act’s passage, President Joe Biden in November visited SK Siltron CSS’s new production facility, hailing the company’s investment in Michigan as a “game changer.”

Making wafers and semiconductors in Michigan will decrease the nation’s reliance on foreign-made goods and support good-paying jobs, said U.S. Rep. Dan Kildee, whose Congressional district includes Bay County.

“With new laws like the CHIPS and Science Act, we’re bringing back manufacturing jobs to Michigan, fixing supply chains, and helping to lower costs for Michigan families,” Kildee said.

The demand for chips is rapidly increasing as automakers scramble to enter the electric vehicle market and telecommunication companies expand ultra-fast 5G networks.

Silicon carbide chips are considered the future of the EV industry because they help reduce charging time and extend driving range by 5% to 10%, the company said. The wafers have high hardness, heat resistance and the ability to withstand high voltages.

A single, 6-inch diameter wafer manufactured by SK Siltron CSS can be used by other companies to make 450 chips — enough to support the power systems of up to eight electric vehicles.

Gave said SK Siltron’s Bay County production facilities are the only ones of its kind in Michigan. Globally, only about 10 companies produce silicon carbide wafers.

“I think our facility is a crown jewel and we are on the leading edge of bringing high-tech manufacturing to Michigan,” Gave said. “We want our customers, our suppliers and others in the semiconductor industry to come join us in Michigan.”

SK Siltron CSS’s investment in Bay County will have a big impact on area residents for years to come, said Trevor Keyes, Bay Future president and CEO.

“This ensures that Bay County and the state of Michigan will continue to be at the forefront of mobility, technology and ingenuity now and well into the future,” Keyes said.