MACOM Announces Strategic Capital Investment Plan

Rhea-AI Summary

MACOM Technology Solutions (Nasdaq: MTSI) has announced a five-year strategic investment plan worth $345 million to modernize its Massachusetts and North Carolina semiconductor wafer fabrication facilities. The plan is supported by proposed funding through the CHIPS and Science Act, including up to $70 million in direct funding from the U.S. Department of Commerce.

The total government support could reach $180 million through a combination of federal funding, tax credits, and state support, including $15.7 million from the Massachusetts Technology Collaborative. MACOM plans to self-fund the remaining $165 million through operating cash flow over five years.

The investment will focus on expanding clean rooms, modernizing production lines, and upgrading infrastructure at both facilities. The Massachusetts facility will see modernization of 100mm production lines and installation of 150mm GaN-on-SiC manufacturing capabilities, while the North Carolina facility will receive 150mm wafer size production capabilities and advanced MOCVD epitaxial growth capabilities.

Positive

• Secured potential government funding of up to $180 million, offsetting ~52% of total investment costs
• Strategic expansion of manufacturing capabilities with 150mm GaN-on-SiC technology
• Planned facility modernization supports growth in Defense, Telecommunications and Datacenter markets
• Company's strong cash flow enables self-funding of $165 million investment portion

Negative

• Significant capital expenditure requirement of $165 million from operating cash flow over five years
• Final agreement with CHIPS Program Office still pending, funding not yet secured

Insights

Investment Strategist

The $345 million capital investment plan represents a transformative initiative for MACOM's manufacturing capabilities, with potential government support covering up to 50% of costs. The plan's structure, combining federal CHIPS Act funding ($70 million), tax credits and state support ($15.7 million from Massachusetts), demonstrates excellent capital allocation strategy by leveraging public funds to modernize critical infrastructure while only requiring $165 million in company self-funding over five years.

The focus on GaN-on-SiC technology and 150mm wafer capabilities positions MACOM strategically in high-growth markets, particularly in RF and microwave applications for defense and telecommunications. The facility upgrades in both Massachusetts and North Carolina create operational redundancy and expanded capacity, which should strengthen MACOM's competitive position in the domestic semiconductor supply chain.

The investment's timing aligns with increasing demand for domestic semiconductor manufacturing and positions MACOM to capture market share in critical technology segments. The company's strong operating cash flow can comfortably support the self-funded portion, making this a well-balanced investment strategy that enhances long-term shareholder value while minimizing capital risk.

Semiconductor Industry Analyst

The facility modernization plan addresses critical technological gaps in domestic semiconductor manufacturing. The upgrade from 100mm to 150mm GaN-on-SiC wafer production represents a significant technological leap that will enhance production efficiency and yield rates. This transition typically results in a 75% increase in chips per wafer, substantially improving cost economics.

The investment in advanced MOCVD epitaxial growth capabilities is particularly noteworthy, as it enables MACOM to produce more sophisticated compound semiconductors essential for next-generation RF applications. The focus on GaAs, GaN and III-V materials aligns with growing demand in 5G infrastructure, defense systems and data center applications.

For context, this modernization puts MACOM's facilities on par with leading global competitors, potentially reducing reliance on foreign semiconductor manufacturing while strengthening domestic supply chain resilience. The infrastructure upgrades, including HVAC and power systems, will likely improve yield consistency and reduce operational costs long-term.

• Plan Supports MACOM’s Strategy to Advance United States Semiconductor Manufacturing and Technology Leadership
• CHIPS and Science Act Proposed Direct Funding, Federal Investment Tax Credits and Direct State Funding Would Offset up to 50% of Costs

LOWELL, Mass.--(BUSINESS WIRE)-- MACOM Technology Solutions Holdings, Inc. (“MACOM”) (Nasdaq: MTSI), is pleased to announce its long-term investment plan to modernize its Massachusetts and North Carolina semiconductor wafer fabrication facilities. MACOM’s five-year strategic investment plan of up to $345 million is supported by a recently executed preliminary, non-binding agreement with the CHIPS Program Office, which would provide for proposed direct funding from the U.S. Department of Commerce under the CHIPS and Science Act of up to $70 million. The preliminary terms propose up to $180 million to be supported by the CHIPS and Science Act through a combination of direct Federal funding, Federal Investment Tax Credits and State funding, including direct funding from the Massachusetts Technology Collaborative of up to $15.7 million as well as other incentives from the State of Massachusetts. It is expected that the balance of approximately $165 million would be self-funded by MACOM’s operating cash flow over the next five years.

This wafer fab capital investment plan supports MACOM’s growth and market positioning strategy to be an industry leading supplier of advanced RF, microwave and millimeter wave semiconductor technologies. MACOM’s innovative technology and product portfolio supports existing and emerging Defense, Telecommunications and Datacenter applications.

Massachusetts Wafer Fabrication Facility Investment Highlights

• Expansion of clean rooms within existing building footprint
• Modernization of current 100mm production lines, including GaAs, GaN, Silicon and other III-V materials
• Installation of 150mm GaN-on-SiC manufacturing capability for advanced node applications
• Infrastructure upgrades (HVAC, water, solar and power systems)

North Carolina Wafer Fabrication Facility Investment Highlights

• Expansion of clean rooms within existing building footprint
• Installation of 150mm wafer size production capabilities to support RF GaN-on-SiC processes
• Installation of advanced MOCVD epitaxial growth capabilities
• Infrastructure upgrades (HVAC, water, power systems)

“This plan will strengthen MACOM’s domestic semiconductor manufacturing capabilities, accelerate our growth strategy and enable us to better service our customers with leading technologies,” said Stephen G. Daly, President and Chief Executive Officer, MACOM.

MACOM expects to work with the CHIPS Program Office to finalize the details and terms of a definitive agreement.

About CHIPS for America

CHIPS for America has awarded over $33 billion of the over $36 billion in proposed incentives funding allocated to date. These announcements across 22 states are expected to create over 125,000 jobs. Since the beginning of the Biden-Harris Administration, semiconductor and electronics companies have announced nearly $450 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 chips.gov to learn more.

About Massachusetts Technology Collaborative (MassTech)

The Massachusetts Technology Collaborative (MassTech) is a statewide public agency focused on advancing technology statewide. The organization strengthens the competitiveness of the tech and innovation economy by driving strategic investments, partnerships and insights that harness the talent of Massachusetts. MassTech supports the Bay State’s tech sector with a strategic focus on talent, ecosystems and innovation infrastructure across its diverse divisions and programs.

Find out more: www.masstech.org

About MACOM

MACOM designs and manufactures high-performance semiconductor products for the Telecommunications, Industrial and Defense and Datacenter industries. MACOM services over 6,000 customers annually with a broad product portfolio that incorporates RF, Microwave, Analog and Mixed Signal and Optical semiconductor technologies. MACOM has achieved certification to the IATF16949 automotive standard, the ISO9001 international quality standard and the ISO14001 environmental management standard. MACOM operates facilities across the United States, Europe, Asia and is headquartered in Lowell, Massachusetts. To learn more visit www.macom.com.

Special Note Regarding Forward-Looking Statements

This press release contains forward-looking statements. These forward-looking statements include, among others, statements about MACOM’s strategic investment plan, negotiation and finalization of a definitive agreement with and receipt of funding from the Federal and State governments and MACOM’s ability to utilize such funding and to self-fund a portion of and execute on its capital investment plan, MACOM’s growth strategy and market positioning resulting therefrom and execution of the previously announced transfer of the North Carolina wafer fabrication facility from Wolfspeed, Inc. to MACOM.

These forward-looking statements reflect MACOM’s current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause those events or our actual activities or results to differ materially from those indicated by the forward-looking statements, including our ability to develop new products and achieve market acceptance of those products; component shortages or other disruptions in our supply chain, including as a result of geopolitical unrest or otherwise; inflationary pressures; any failure to accurately anticipate demand for our products and effectively manage our inventory; our dependence on a limited number of customers; risks related to any weakening of economic conditions; our ability to compete effectively; and those other factors described in “Risk Factors” in MACOM’s filings with the Securities and Exchange Commission (“SEC”), including its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and other filings with the SEC. These forward-looking statements speak only as of the date of this press release, and MACOM undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250114364288/en/

Company Contact:

MACOM Technology Solutions Holdings, Inc.

Stephen Ferranti

Vice President, Corporate Development and Investor Relations

P: 978-656-2977

E: stephen.ferranti@macom.com

Source: MACOM Technology Solutions Holdings, Inc.

FAQ

What is the total value of MACOM's (MTSI) strategic investment plan?

MACOM's strategic investment plan is valued at $345 million over five years.

How much CHIPS Act funding is MACOM (MTSI) expected to receive?

MACOM is proposed to receive up to $70 million in direct funding from the U.S. Department of Commerce under the CHIPS Act.

What improvements are planned for MACOM's Massachusetts facility?

The Massachusetts facility will see clean room expansion, modernization of 100mm production lines, installation of 150mm GaN-on-SiC manufacturing capability, and infrastructure upgrades.

How much will MACOM (MTSI) self-fund from its operating cash flow?

MACOM plans to self-fund approximately $165 million through operating cash flow over the next five years.

What is the total government support expected for MACOM's (MTSI) investment plan?

Total government support could reach $180 million through federal funding, tax credits, and state support, including $15.7 million from Massachusetts.