WASHINGTON, Dec 13 (Reuters) - The U.S. Commerce

Department said Friday it reached a preliminary deal with German

auto supplier Bosch for up to $225 million in

subsidies to build silicon carbide power semiconductors in

California that are key for electric vehicles.

The department said the funding will support Bosch's planned

$1.9 billion investment to transform its manufacturing facility

in Roseville, California for production of SiC power

semiconductors. Commerce is also offering Bosch approximately

$350 million in proposed government loans for the project.

The department is tapping the $52.7 billion fund to

subsidize U.S. semiconductor production and research approved in

2022. Officials have been racing to finalize terms for major

loans in the weeks before President-elect Donald Trump takes

office.

Bosch expects to produce its first chips on 200-millimeter

wafers in its Roseville facility starting in 2026. SiC chips

are key components for automotive, telecommunications, and

defense industries. They utilize less energy and are critical

for boosting the efficiency of electric vehicle driving and

charging, the department said.

In 2023, Bosch acquired key assets of California-based TSI

Semiconductors and said producing the chip would "be heavily

dependent on federal funding opportunities."

Like other automotive manufacturers, Bosch was hit hard by

disruptions to semiconductor production in Asia exacerbated by

the COVID-19 pandemic.

In October, the department said it reached preliminary

agreement with Wolfspeed ( WOLF ) for $750 million in grants for

its new North Carolina silicon carbide wafer manufacturing plant

facility.

Commerce said when the Bosch facility reaches full capacity,

the project could comprise more than 40% of all U.S.-based SiC

device manufacturing capacity.

"The Roseville investment enables Bosch to locally produce

silicon carbide semiconductors, supporting U.S. consumers on the

path to electrification," said Paul Thomas, president of Bosch

in North America in a statement.

Representative Doris Matsui, a California Democrat who

helped write the 2022 law, said the award to Bosch would allow

them to build "essential components for advances in clean

mobility, electric vehicles and other clean energy technology."