‘Michigan’s Secret Weapon:’ UP Business Missing Link in Semiconductor Solution

In just a few years, “chips,” “semiconductors,” and “polysilicon” entered the everyday lexicon.

A company located in Michigan’s Upper Peninsula has been tinkering with the microscopic electrical connections that make our cars, phones and televisions work for more than 50 years.

Calumet Electronics Corporation was founded in 1968 after the copper mines closed. The closure caused a mass exodus from the surrounding area. To support the local economy, a banker interested in semiconductors found community investors to support a new business.

The unique launch speaks to the district’s pride in solving problems, said Chief Operating Officer Todd Brassard.

“This company was built in general to create jobs in a small community,” he said.

Calumet is already a leader in the aerospace, defense, communications, power, medical, industrial control, space and national security sectors and can benefit from federal funds made available through the recently passed Chip and Science Act.

The act, signed by President Joe Biden this month, aims to bring semiconductor manufacturing back to America.

Factories that produce chips, called foundries, typically take three to five years to build. But strengthening the chip ecosystem where Calumet excels is something the country can invest in now, Brassard said.

Calumet hit its stride entering the new millennium, riding high on expectations surrounding the Internet and telecommunications. In 2000, 30% of the world’s printed circuit board production was in the United States, according to the trade association Institute of Printed Circuits.

But outsourcing is quickly eroding the industry, leaving the nation today with just 4 percent of that global share, according to the institute.

To survive, Calumet kept its profits from the telecommunications boom, bought up abandoned equipment, and used local engineers and manufacturers.

Brassard estimates there are only 40 to 60 stores like Calumet that still rely entirely on American labor.

“Offshore engineering or offshore manufacturing was always very tempting, but we didn’t want to lose control of our company,” Brassard said.

That resilience has paid off as the pandemic has highlighted vulnerabilities in global supply chains and dependence on Asian factories.

Although semiconductors were invented in the US, America’s global share of manufacturing has fallen from 37% to 12% in just three decades, according to the Semiconductor Industry Association.

Connected: A $52 ​​billion semiconductor package is a ‘big fucking’ deal for Michigan

Semiconductor innovation is really where the US holds its ground.

American semiconductor firms have maintained their competitive edge in microprocessors and other leading devices. It continues to lead in research and development, design and process technology, according to the industry association.

“To create a product, you need the whole process,” he said. “You don’t just need a handful of silicon.”

Brassard’s team adopted the mantra “chips don’t float,” meaning the tiny fingernail-sized chip needs a package to sit in and an electrical system to connect it. Brassard compared it to an engine without a transmission.

Engineers at Calumet have developed substrates to route this connection between the chip and an application, such as a phone or car.

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Earlier this year, Calumet received $2.6 million through business and community development grant programs from the Michigan Economic Development Corporation.

The investment enhances Calumet’s newly constructed 35,000-square-foot manufacturing facility to increase substrate capacity. It will also create about 80 new manufacturing and engineering positions.

“We’re just one store in UP, but we can lead by example,” Brassard said. “If a bunch of Yoopers can do it, what’s everyone else’s excuse?”

Pride and patriotism are great recruiting tools.

“We want engineers to be engaged, have fun and do challenging work,” Brassard said. “Would you rather just create a circuit board on a toaster every day, or would you rather save the country?”

It seems counterintuitive that Calumet’s geography is one of its competitive advantages, given that it takes nearly a full day from any major metro area to reach the facilities. But just 20 minutes down the road is Michigan Tech University.

“The people who are solving all these really hard and critical problems for the U.S. are all 25 and younger,” Brassard said.

Michigan Tech and UP’s rural nature could also make the Keweenaw Peninsula a contender for a much less publicized piece of Chips’ act.

Included in the massive $280 billion bill are two place-based initiatives.

The first offers $10 billion to 20 communities over five years to create regional technology centers in distressed areas of the country.

The second initiative offers $1 billion to 10 communities over five years. This Recompete Act pilot project will target “disadvantaged communities” with significantly lower than average employment-to-population ratios.

The Recompete Act is based on the work of economist Tim Bartik of the WE Upjohn Institute in Kalamazoo.

Bartik said he sees the initiatives as complementary, and there may be areas in the U.S. that check both boxes.

For example, in much of UP, less than 78% of prime-age workers are employed. UP also now has the technological presence of an engineering university in addition to government contractors.

The budget was cut from the original $175 billion over 10 years, but the funds could still make a big impact on UP, Bartik said.

“A small community, a rural community with a relatively modest population, it’s easier with smaller amounts of funds to really make a difference in the way of growth,” he said.

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Brassard said he doesn’t yet know if Calumet will get funding from the Chips act, which would give $52.7 billion to subsidize growers and research.

Funding must be granted within five years. Brassard sees this as an opportunity to connect politicians with engineers and manufacturers. He laments that he recently heard a politician describe circuit boards as an expensive piece of plastic that holds the chip.

Navigating red tape is new to the folks at Calumet, but making something out of nothing has been the company’s specialty for 54 years. And that, Brassard said, is what makes UP “Michigan’s secret weapon.”

“At the end of the day, what we do here is we build things, we make things,” he said. “We survive.”

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