WASHINGTON, Sept 24 (Reuters) - The U.S. Commerce

Department said on Tuesday it had finalized a $123 million grant

for Polar Semiconductor to expand its plant in Minnesota, which

would allow the company to nearly double its U.S. production

capacity of power and sensor chips.

The award, part of the Biden administration's $52.7 billion

semiconductor manufacturing and research subsidy program, is the

first in the program to be finalized by the department.

Commerce will distribute funds based on Polar's completion of

project milestones.

Commerce Secretary Gina Raimondo said the award would help

"create a new U.S.-owned foundry for sensor and power

semiconductors" and boost Polar production from roughly 20,000

wafers per month to 40,000 serving aerospace, automotive, and

defense needs.

The state of Minnesota is contributing $75 million to the

$525 million expansion at Polar.

In April, Polar -- 70% owned by Sanken Electric ( SANJF ) and

30% held by Allegro MicroSystems ( ALGM ) -- said Niobrara

Capital and Prysm Capital planned to invest $175 million for

around 59% of Polar.

Commerce has allocated more than $35 billion for 26 projects

including $6.4 billion in grants to South Korea's Samsung

to expand chip production in Texas, $8.5 billion for

Intel ( INTC ), $6.6 billion for Taiwan's TSMC to

build out its American production and $6.1 billion for Micron

Technology ( MU ) to fund U.S. factories.

The department must complete due diligence before it can

finalize awards.

"We expect this to be the first of many awards to be

finalized soon," said top White House economic adviser Lael

Brainard on Monday.

Added Raimondo: "You're going to start to see more awards

like this, dollars to companies in the coming weeks and months."

The 2022 chips law championed by President Joe Biden aims to

boost efforts to make the U.S. more competitive with China and

dramatically expand U.S. chips production. The chips law also

includes a 25% investment tax credit for building chip plants,

estimated to be worth $24 billion.

Separately, Congress gave final approval on Monday to

legislation that will streamline federal permitting processes

for semiconductor manufacturing projects.