Nov 13 (Reuters) - The U.S. Commerce Department said

Wednesday it has agreed to provide up to $18.2 million in

government subsidy funding to Akash Systems to support the

construction of a 40,000-square-foot cleanroom space for

advanced semiconductor manufacturing.

This proposed funding from the $52.7 billion semiconductor

manufacturing and research subsidy program, will be combined

with funding from California-based Akash, venture capital firms,

and other private investors, to support a $121 million

investment in West Oakland, California to manufacture various

Diamond Cooling substrates, devices and systems at scale.

Akash is utilizing its "Diamond Cooling" technology to

improve thermal management with AI-focused data centers.

"As a U.S. company developing next-generation semiconductor

technology, this validates our vision and strategy, helping us

to deliver cutting-edge solutions that address thermal

challenges in today's high-performance computing and

communication systems," Akash Systems CEO Felix Ejeckam said in

a statement.

In November 2023, the IUE-CWA workers union and Akash

Systems announced labor agreements covering both construction

and production workers, including a first-in-the-industry labor

neutrality agreement for semiconductor production workers in

West Oakland.

Commerce Secretary Gina Raimondo said the Akash award would

help ensure "the United States is a global leader in every part

of the semiconductor supply chain."

The Commerce Department has awarded around 20 companies

about $36 billion in preliminary agreements through the

bipartisan 2022 Chips and Science Act, aimed at luring

chipmakers out of Asia to expand production in the U.S.

So far, the only finalized deal went to Polar Semiconductor

for $123 million to expand and modernize a chip fab in

Bloomington, Minnesota.

Polar agreed to a five-year ban on stock buybacks and to an

upside sharing agreement that requires sharing excess profit

with the government as a condition of the funding.

The Commerce Department is racing to finalize major awards

before President-elect Donald Trump takes office in January.

Reuters reported last week that Taiwan Semiconductor

Manufacturing Co ( TSM ), GlobalFoundries ( GFS ) and at least

one other chipmaker are poised to receive their final chips

awards from the Biden administration.