WASHINGTON (Reuters) - The U.S. Commerce Department said on Tuesday it has finalized $406 million in government grants to Taiwan's GlobalWafers to significantly increase production of silicon wafers in the United States.

The funds for projects in Texas and Missouri will establish the first high-volume U.S. production of 300-mm wafers for advanced semiconductors and expand production of silicon-on-insulator wafers, the Commerce Department said.

The wafers are a crucial component of advanced semiconductors and part of the Biden administration's efforts to boost the domestic chips supply chain.

The subsidy will support nearly $4 billion in investments by GlobalWafers in both states to construct new wafer manufacturing facilities and create 1,700 construction and 880 manufacturing jobs.

"We look forward to innovating with our U.S.-based chip customers for decades to come," GlobalWafers CEO Doris Hsu.

GlobalWafers said in 2022 it would build a $5 billion plant in Texas to make 300-mm silicon wafers used in semiconductors, switching from a defunct plan to invest in Germany.

Currently, five major companies including GlobalWafers control more than 80% of the global 300-mm silicon wafer manufacturing market and about 90% of silicon wafers are produced in east Asia.

GlobalWafers plans to build and expand facilities in Sherman, Texas, to produce wafers used to manufacture leading-edge, mature-node, and memory chips and a new facility in St. Peters, Missouri, for wafers used for defense and aerospace chips.

The department has been racing to finalize awards under the 2022 $52.7 billion 2022 CHIPS and Science Act semiconductor manufacturing and research subsidy program before President-elect Donald Trump takes office on Jan. 20 .

Last week, Commerce finalized a $6.165 billion government subsidy for Micron Technology ( MU ) to produce semiconductors in New York and Idaho.

Commerce has finalized other awards in recent weeks including a $7.86 billion award for Intel ( INTC ), $6.6 billion for Taiwan Semiconductor Manufacturing Co's ( TSM ) opens new U.S. unit and $1.5 billion for GlobalFoundries ( GFS ).

(Reporting by David Shepardson; Editing by Lincoln Feast.)