Oct 21 (Reuters) - The U.S. Commerce Department said

Monday it plans to award $325 million to Hemlock Semiconductor

to significantly expand production capacity of

semiconductor-grade polysilicon as it seeks to shift the chips

supply chain.

The government grant from the $52.7 billion semiconductor

manufacturing and research subsidy program would support

construction of a new manufacturing facility on the company's

existing site in Hemlock, Michigan.

"Polysilicon is the bedrock of semiconductors, and it's

important we have a reliable source of this material to

manufacture the chips that help support our economic and

national security," said Commerce Secretary Gina Raimondo.

The Biden administration has proposed billions in grants to

major chips manufacturers like Intel ( INTC ), TSMC,

Samsung and Micron and wants a steady supply

of polysilicon to address the expanded production.

Hemlock is a joint venture owned by Corning Inc ( GLW ) and

Shin-Etsu Handotai, a unit of Shin-Etsu Chemical ( SHECF ).

Hemlock Semiconductor said it is "planning for a

once-in-a-generation investment in advanced technologies to

continue serving as a top polysilicon supplier to the

leading-edge semiconductor market."

In total, the Biden administration has announced preliminary

awards totaling $36 billion of the $39 billion set aside for

manufacturing subsidies but has only finalized one. Officials

expect to come to final terms on numerous others before the end

of the year.