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Commerce releases info on plans for CHIPS funding

September 08, 2022
By: Conor Gowder

The recently-passed CHIPS and Science Act included $54.2 billion in appropriations, largely for semiconductor manufacturing incentives ($39 billion) and R&D ($11 billion). The administration is releasing information about its planned distribution of funds. Recent resources include: a strategic plan from the U.S. Department of Commerce, the agency administering the bulk of the funding; a research recommendations report from the President’s Council of Advisors on Science and Technology (PCAST); and, a new CHIPS.gov website from Commerce.

Commerce’s strategic plan for CHIPS – Semiconductor manufacturing incentives

A Strategy for the CHIPS for American Fund largely serves as a clear-language guide to the statutory authorities and requirements that will guide Commerce’s distribution of the manufacturing and R&D funds, as well as some additional information about implementation plans. This includes mandates found not only in the CHIPS and Science Act but also in the FY 2021 defense authorization act that originally approved many of the CHIPS programs.

As such, the plan is a useful document for any entity interested in seeking funds from any of the forthcoming Commerce programs.

Highlights from the plan for the semiconductor manufacturing incentives include the following:

  • For the $28-billion, large-scale investment program, Commerce intends to rely on its loan and loan guarantee authority (to the possible exclusion of grants and cooperative agreements).
  • The $10 billion funding pool for existing chips, specialty technologies and suppliers will have highly variably award structures, sizes and purposes, depending on the project.
  • Commerce plans to begin soliciting applications for both programs by February 2023.
  • Both programs will use a two-step application process that allows for feedback before full submissions are required.

Commerce is seeking a fast and competitive process for these funds. Even with a two-phase application beginning in February, Commerce Secretary Gina Raimondo has said she hopes to begin awarding funding by spring. Further, the secretary is urging states to be ready to compete, saying, “This is a race.”

For those planning to compete, the report provides extensive guidance to future applicants. Commerce’s recommended considerations include:

  • attracting private capital;
  • securing additional incentives;
  • building ecosystems and supply chains;
  • expanding workforce pipelines; and,
  • creating inclusive opportunities.

Commerce’s strategic plan for CHIPS – R&D centers

The plan also provides insights to Commerce’s planned considerations for its new R&D funds.

The National Semiconductor Technology Center (NSTC) will be a public-private partnership that will “incubate” in Commerce’s CHIPS R&D Office. The plan’s description of the NSTC reads like a Manufacturing USA institute, except with a more active public management role in the early stages of its initial 10-year plan. Also like the institutes, the NSTC will drive solutions for both research and workforce issues in its field.

Commerce plans to work through the National Institute of Standards and Technology (NIST) to launch a National Advanced Packaging Manufacturing Program that will include both a “network of entities” focused on product and integration of materials and processes, and a pilot packaging facility to test new approaches.

Perhaps the most surprising revelation in Commerce’s strategic plan is that the agency intends to fund up to three new Manufacturing USA institutes, rather than just one. The new institutes will emphasize virtualization and automation, among other topics.

DOC Research and Development

The day the legislation was signed (Aug. 9, 2022), the President’s Council of Advisors on Science and Technology (PCAST) sent a letter to the White House regarding the appropriation of $11 billion for semiconductor R&D, offering a set of four broad recommendations to promote “optimal use” of the $11 billion ahead of their forthcoming report that will further detail these recommendations, among other items. These recommendations include actions to:

  • Build a broad coalition of departments and programs to strengthen the manufacturing industry, providing a framework on how to structure public-private partnership to best share the boons of good jobs and educational opportunities across the U.S.;
  • Focus on education and the future workforce by emphasizing the creation of educational opportunities and creating a “national microelectronics training network” that would upgrade laboratory facilities at dozens of geographically distributed universities and colleges, including community colleges and minority serving institutions, such as Historically Black Colleges and Universities, Hispanic-Serving Institutions, Asian American and Pacific Islander Serving Institutions, and Tribal Colleges and Universities;
  • Foster innovation by allotting a portion of CHIPS+ funding towards the financial and material (e.g., equipment, facilities) support of startup companies and academic researchers; and,
  • Set a national research agenda that supports a long lasting “semiconductor ecosystem.” Introducing national “grand challenges” to ensure that the United States leads the world in semiconductor innovation, with one such challenge suggested to be building a “zetta-scale supercomputer” that would be 1,000 times faster than the fastest computer available today. Just weeks after PCAST’s letter, NIST outlined seven “grand challenges” of their own.

As mentioned in PCAST’s livestreamed meeting, the above four recommendations have been fleshed out into 10 more detailed, specific recommendations available in its forthcoming report.

More information on these recommendations can be found here, at PCAST’s Sept. 7 discussion, and in the council’s forthcoming report which will be available here once released.

Advanced Manufacturing Investment Tax Credit

In addition to the over $54 billion in appropriations, the CHIPS and Science Act created the Advanced Manufacturing Investment Tax Credit (ITC), which will provide a 25 percent investment tax credit for investments made in semiconductor manufacturing, covering both the construction of qualified facilities and “other eligible depreciable tangible property.” The incentive is expected to cost about $24 billion through 2031. To be eligible for this tax credit, projects must start construction between Jan. 1, 2023, and Dec. 31, 2026.

There have already been several large companies that have announced planned investments in U.S. semiconductor manufacturing, totaling over $50 billion, since the passage of the bill: Micron has announced a $40 billion investment in memory chip manufacturing, spurring the creation of up to 40,000 jobs in construction and manufacturing, while Qualcomm and GlobalFoundries announced a partnership including $4.2 billion to expand chip manufacturing.

Commerce’s strategic plan notes that it may adjust its semiconductor manufacturing funding plans based on the performance of the ITC.

New CHIPS Website

The Department of Commerce recently launched the CHIPS.gov website. This new website is intended to serve as a public resource detailing the different CHIPS Program initiatives, departmental priorities, funding opportunities, timelines, etc. as the information becomes available. The CHIPS website also outlines the implementation priorities laid out in President Biden’s executive order.

More information can be found at the new CHIPS.gov website

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