Infinera (INFN, Financials) and the U.S. Department of Commerce have established a preliminary agreement wherein Infinera may get up to $93 million in direct support under the CHIPS and Science Act to increase U.S. semiconductor manufacturing. With more tax credits from the legislation, federal funds may reach about $200 million, enhanced by possible municipal and state assistance.
The money will help Infinera develop sophisticated packaging facilities in Lehigh Valley, Pennsylvania, and expand and enhance semiconductor capability in Silicon Valley, California. These initiatives could boost local manufacturing capacity tenfold and provide around 1,700 employees in the building and manufacturing industries, according to a statement. As demand for data centers and AI-driven photonic semiconductors increases, the business claims the financing will improve supply chain security and competitiveness.
Emphasizing the relevance of the projects for U.S. national and economic security, Infinera recognized bipartisan support and cooperation with government officials as essential elements in attaining the preliminary agreements.
The financing agreement comes as Nokia (NOK, Financials) is in the process of acquiring Infinera. Nokia plans to boost its Optical Networks business by 75% after buying Infinera for $2.3 billion. Through this acquisition, Nokia expects to save €200 million by 2027 via supply chain efficiency and operating cost reduction. Nokia thinks the combination can capitalize on the fast-growing webscale market for AI-driven apps and data center interconnects. The deal should be finalized by mid-2025 if regulations allow.
