Commerce Dept. Rolls Out First CHIPS Funding

WASHINGTON — The Commerce Department on Tuesday announced the availability of the first tranche of a total $50 billion in funding intended to grow and revitalize the nation’s homegrown semiconductor industry.

The first funding opportunity seeks applications for projects to construct, expand or modernize commercial facilities for the production of leading-edge, current-generation and mature-node semiconductors.

As part of the bipartisan CHIPS and Science Act, the Commerce Department is overseeing the distribution of $50 billion intended to bolster the semiconductor industry, including $39 billion in incentives.

Areas to benefit from that funding include everything from front-end fabrication to back-end packaging, the department said in a press release.

A second funding opportunity, this one covering semiconductor materials and equipment facilities, is expected to be announced in the late spring. Another funding opportunity, geared specifically to research and development facilities, is coming in the fall.

“The CHIPS and Science Act presents a historic opportunity to unleash the next generation of American innovation, protect our national security and preserve our global economic competitiveness,” said Commerce Secretary Gina Raimondo, in a written statement. 

“When we have finished implementing CHIPS for America, we will be the premier destination in the world where new leading-edge chip architectures can be invented in our research labs, designed for every end-use application, manufactured at scale and packaged with the most advanced technologies,” she said.

Last week, Raimondo laid out the administration’s strategic objectives for the program in a speech at Georgetown University’s School of Foreign Service. These include the creation of two, new, large-scale chip fabrication clusters as well as multiple high-volume advanced packaging facilities by the end of the decade.

The first funding opportunity details the application process and outlines how the department will evaluate applications, including a primary focus on how projects advance U.S. economic and national security. 

Applications will also be evaluated for commercial viability, financial strength, technical feasibility and readiness, workforce development and efforts to spur inclusive economic growth. 

Awards will take the form of direct funding, federal loans and/or federal guarantees of third-party loans. 

Speaking on the Senate floor this morning, Senate Majority Leader Chuck Schumer, D-N.Y., just six months after President Joe Biden signed the CHIPS and Science Act into law, the nation is already seeing it pay major, major dividends for our economy to the tune of $200 billion in private investments across 16 states.  

“Today’s [funding] rollout is a major step towards making America the world leader in chip production once again, with tremendous benefits for our national security, for outcompeting the Chinese Communist Party, and creating tens of thousands of good-paying union jobs right here at home,” Schumer said.

Energy and Commerce Committee Ranking Member Rep. Frank Pallone Jr., D-N.J., said he also saw the funding announcement as a “crucial” development.

He went on to say that it would begin to unleash “the promise of the CHIPS and Science Act to create good-paying jobs right here at home and end our dangerous dependence on semiconductors manufactured abroad.”

The department is stressing that the awards are designed to complement — not replace — private investment and other sources of funding, and applicants are strongly encouraged to bring capital to the table. 

CHIPS for America awards will be made as soon as applications can be rigorously evaluated and negotiated, the department said in a press release.

On a related note, the department is also encouraging prospective applicants to claim the Advanced Manufacturing Investment Credit (Investment Tax Credit) administered by the Treasury Department and the Internal Revenue Service. 

The Investment Tax Credit is a federal income tax credit for qualifying investments in facilities manufacturing semiconductors or semiconductor manufacturing equipment and a critical component of the suite of incentives provided by the CHIPS and Science Act. 

The Commerce and Treasury departments are coordinating closely on CHIPS funding and the Investment Tax Credit to ensure these incentives work together to further the administration’s economic and national security goals. 

The Treasury expects to publish guidance on the Investment Tax Credit in March, in addition to a forthcoming Commerce Department guidance on national security guardrails.

“Today’s announcement marks a major step forward in implementing the CHIPS and Science Act and brings the U.S. one step closer to once again leading the world in manufacturing the chips that are essential to our long-term national and economic security,” said Rep. Annie Kuster, D-N.H., chair of the New Democrat Coalition.

“This federal funding will catalyze private investment to strengthen our economy, create good-paying jobs in communities across the country, boost domestic manufacturing, and ensure that America continues to lead the global economy,” she said.

Dan can be reached at [email protected] and @DanMcCue