The Biden administration has been working to green-light agreements with firms in the chip making supply chain over recent months, hoping to cement it as part of his legacy before leaving office in January.
Once a deal is finalized, funds can start heading to companies when they hit certain milestones.
The Micron investment helps bring development and production of advanced memory semiconductor technology to US shores, said Commerce Secretary Gina Raimondo.
This "is crucial for safeguarding our leadership on artificial intelligence and protecting our economic and national security," she added in a statement.
The United States has been trying to reduce its dependence on China and other countries for semiconductors.
In this case, Washington is keen to build up a reliable domestic supply of chips that can go into advanced technologies ranging from personal computing to artificial intelligence -- including enabling new AI models.
The latest funding comes under the CHIPS and Science Act, a major law passed during Biden's term aimed at strengthening the US semiconductor industry.
- 'Stable supply' -
The Micron deal in particular supports the company's two-decade plan, including investments of some $100 billion in New York and $25 billion in Idaho, said the Commerce Department.
This should create some 20,000 jobs and help the US grow its share of advanced memory manufacturing, the department added.
Apart from the efforts in New York and Idaho, the Commerce Department also signed a preliminary agreement with Micron for up to $275 million in proposed funding to expand and modernize its facility in Virginia.
The aim is to support a "stable supply" of Micron's technology, involving chips that are key to the automotive and industrial markets, the department noted.
"Memory chips are foundational to all advanced technologies," Raimondo said.
"As the only US-based manufacturer of memory, Micron is uniquely positioned to bring leading-edge memory manufacturing to the US," said Micron President Sanjay Mehrotra in a statement.
The United States used to make nearly 40 percent of the world's chips but this proportion is now around 10 percent, with none being the most advanced chips.
While the US government has unveiled over $36 billion in grants through the CHIPS Act, some of the funds remain in a due diligence phase and cannot yet be disbursed until agreements are made final.
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