Michigan House Panel Removes $40M State Funding for Hemlock Semiconductor Expansion

Michigan lawmakers have introduced new uncertainty into a U.S. semiconductor-materials expansion. On December 10, 2025, the Michigan House Appropriations Committee voted to remove $40 million in state funding tied to Hemlock Semiconductor’s planned facility expansion in Hemlock, Michigan. The committee also moved to “disapprove” roughly $645 million in previously authorized state “work project” spending, placing several initiatives under review.

Behind the $40M cut changes

Hemlock Semiconductor sits upstream in the chip supply chain in making hyper-pure semiconductor-grade polysilicon that enable the wafers and components used to manufacture advanced chips.  Only a limited number of global suppliers can meet the extreme purity requirements needed for leading-edge semiconductor production, which is why governments and industry players have prioritized expanding domestic capacity.

In January 2025, the U.S. Department of Commerce announced a CHIPS incentives award of up to $325 million for Hemlock to support construction of a new manufacturing facility on its existing Michigan campus focused on producing and purifying hyper-pure polysilicon.

Michigan’s $40 million commitment was designed to complement the federal award. The state support was tied to the Make It in Michigan Competitiveness Fund, which Michigan has used to help companies execute large manufacturing projects that align with national programs like CHIPS.

Public reporting around the project has cited expectations of over 1,000 construction jobs and about 180 permanent manufacturing jobs in the region.

However, on December 10, 2025, Michigan House budget panel used a rarely used budget procedure to disapprove “work projects,” which included the line item tied to Hemlock’s $40 million. Supporters describe this move as oversight of state incentives, while critics argue it disrupts projects that had already been approved.

What happens next?

The funding removal does not automatically cancel Hemlock’s expansion plans, but it could affect project timing, financing, and negotiations. Hemlock has reiterated the project’s importance to U.S. semiconductor supply chains and stated it will continue engaging with state leadership. Michigan House Speaker Matt Hall has indicated that lawmakers may revisit specific projects, including Hemlock’s, in a 2026 supplemental spending bill.

For the broader electronics ecosystem, the situation highlights how domestic manufacturing initiatives often rely on multiple layers of public funding. When one layer shifts, construction timelines can slip and procurement plans may need to adjust especially for upstream materials that require specialized equipment, long build times, and extended qualification cycles.

Why this matters for OEMs, EMS, and engineers

Upstream investments in semiconductor materials reduce reliance on single regions and can help stabilize availability over the long term. When public co-funding becomes uncertain, it can introduce schedule risk that ripples into qualification timelines, sourcing strategies, and long-range capacity planning.

For supply chain teams, this development is a reminder to diversify sources where possible, validate alternates early, and closely track policy-driven incentives that influence where new capacity is built.

IBS Electronics will continue monitoring developments related to Hemlock Semiconductor, Michigan manufacturing incentives, and CHIPS-funded semiconductor supply-chain projects. For ongoing updates and sourcing support across semiconductors and critical materials, visit the IBS Electronics website.