SkyWater Technology Inc. is backing away from plans to build a $1.8 billion semiconductor production and R&D facility in Indiana.

"SkyWater has released its option on the land but remains a valued partner with research opportunities in the works," said Tim Doty, a spokesman for Purdue University, where the project was slated to be built.

Bloomington-based SkyWater announced the project, in partnership with the state of Indiana and Purdue University, in July 2022. The public-private partnership planned to seek federal CHIPS (Creating Helpful Incentives to Produce Semiconductors) and Science Act funding.

Representatives of SkyWater did not immediately respond to a request for comment.

However, in its annual report with the Securities and Exchange Commission in March, it outlined potential risks connected to the Indiana project.

"If we or our counterparties fail to meet our obligations in connection with these public-private partnerships, or if we are not able to realize some or all of the anticipated benefits of such partnerships in the anticipated time frame or at all, our business, financial condition and results of operations may be materially and adversely affected," the report said.

The CHIPS program is slated to provide nearly $53 billion to revitalize domestic manufacturing and supply chains.

The program drew notice Monday with President Joe Biden announcing a preliminary agreement to provide $6.6 billion to Taiwan Semiconductor Manufacturing Co. (TSMC) to help it build three factories in Arizona.

In SkyWater's earnings report in February, it said that it had submitted a CHIPS application in the fourth quarter for modernization and upgrades at its manufacturing facility in Bloomington.

Polar Semiconductor has previously talked about investing at least $420 million for upgrades to its Bloomington facility.

Surya Iyer, president of Polar Semiconductor, said the company is waiting to hear from the federal government about its CHIPS application.

SkyWater, which went public in an April 2021, is growing. For 2023, it reported revenue of $286.7 million, an increase of 34.6% from the previous year. However, it recorded a $25.1 million net loss for the year.