Polar Semiconductor employees work in one of three fabrication areas inside the company’s expansive clean room in Bloomington. (Shari L. Gross, Star Tribune/The Minnesota Star Tribune)

With backing from the Bloomington City Council, Polar Semiconductor is one step closer to getting a piece of the $280 billion CHIPS and Science Act as the city works to boost manufacturing and diversify its economy.

Bloomington's city council and Port Authority have been pursuing projects to make the South Loop district — the area just east of the Mall of America — into a hub of high-tech manufacturing, with the city and Port Authority extending subsidies for German sensor manufacturer SICK earlier this month. Even as the city has supported mall developments, including offering more than $95 million in tax-increment financing to subsidize a possible water park at the mall, the city's economic development effort now shares focus with companies such as Polar, SICK and chipmaker SkyWater Technology.

"It's smart to build on your base. That's what Bloomington is doing," said Peter Frosch, CEO of economic development group Greater MSP, of the city's tech manufacturing sector. Greater MSP is leading a coalition to bring more semiconductor manufacturing, and federal funding, to Minnesota.

Minnesota isn't starting from scratch, said Kevin McKinnon, deputy commissioner for economic development and research with the Minnesota Department of Employment and Economic Development.

"A lot of people in Minnesota may not even realize there's a semiconductor industry here," McKinnon said — but there is. And there's an ecosystem of suppliers and educational institutions to support those chipmakers and train workers, he said, which could help Minnesota companies be more competitive for CHIPS funding — though that federal funding is far from guaranteed.

Bloomington has had a concentration of chipmakers for more than 50 years, Frosch said. Normandale Community College has the country's only two-year program to train the technicians who work on semiconductor manufacturing, and the community college hosted Commerce Secretary Gina Raimondo this summer to talk about about the CHIPS funding and semiconductors. The University of Minnesota this summer launched a program — funded by Polar and other chipmakers — to create training materials for people who will work in the plants.

Some 3,000 people already work in Bloomington's semiconductor and microelectronics plants. In comparison, about 11,000 people work at the Mall of America, according to the city. That's down 15% from a decade ago, but the mall is still by far the largest employer in Bloomington and the largest property tax payer.

The council's vote of support for Polar does not come with any city funding, but the company needed Bloomington's backing to apply for a piece of a $250 million state pot created in the 2023 budget, earmarked for chipmakers pursuing federal CHIPS grants. The federal grant application requires matching funds.

Piecing together state, federal and private funding, Polar hopes to fund a technology upgrade that will cost at least $420 million and double the output at the Bloomington plant.

Sectorwide, Frosch said, Greater MSP hopes to see somewhere between 7,000 and 10,000 new manufacturing jobs in the state's semiconductor and electronics manufacturing industries.

"Our collective goal is to double the size of Minnesota's semiconductor and microelectronics industry," he said.