SkyWater Technology, Inc. ( SKYT ) shares are up on Friday following an announcement about securing up to $16 million in funding administered by the U.S. Department of Commerce.

The proposed federal funding is part of the CHIPS Act, which President Joe Biden signed in 2022. It will support SkyWater’s efforts to enhance its production capabilities at its Minnesota facility. Key markets include aerospace, defense, biomedical, industrial, thermal imaging, and quantum computing.

SkyWater ( SKYT ) will use the funding to accelerate facility modernization, increase production capacity, and develop new technology.

The company expects to boost its semiconductor technology development by 30%, creating around 70 new jobs in Bloomington, Minnesota.

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This funding is also expected to help SkyWater ( SKYT ) meet the rising demand for domestically produced microelectronics and ensure a reliable supply of trusted silicon for critical Department of Defense (DOD) and commercial programs, according to a press release.

In addition to the CHIPS funding, SkyWater ( SKYT ) will receive $19 million from the State of Minnesota’s Forward Fund.

The combined state and federal incentives, along with $320 million in planned customer-funded capital expenditures through 2026. It will also bring SkyWater’s total expected investment to over $350 million this decade. The company said it is also eligible for the Advanced Manufacturing Investment Tax Credit, which could cover up to 25% of qualified capital expenditures.

SkyWater ( SKYT ) CEO Thomas Sonderman emphasized the company’s role in expanding U.S. onshore semiconductor capacity and strengthening the U.S. supply chain.

The funding aligns with the Biden-Harris Administration’s goal to bolster domestic chip production, ensuring long-term economic and national security.

“Today’s proposed investments across Texas and Minnesota would help bolster domestic chip production and help secure our supply chain for decades to come,” said U.S. Secretary of Commerce Gina Raimondo. 

The investment is seen as a critical step in meeting the growing demand for technology essential to the nation’s defense and commercial sectors.

Price Action: SKYT shares are trading higher by 14.3% to $9.430 at last check Friday.

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