NY announces $1B for semiconductor R&D center; U.S. Department of Commerce awards $35M as first step in implementation phase of CHIPS and Science

Activity to build the U.S. semiconductor industry picked up steam on Monday, December 11. On that day, New York State, Gov. Kathy Hochul announced the state was committing $1 billion to what her office described as “a $10 billion partnership with leaders from the semiconductor industry such as IBM, Micron, Applied Materials, Tokyo Electron, and others to establish a next-generation semiconductor research and development center at NY CREATES’ Albany NanoTech Complex.” Also on that day, the U.S. Department of Commerce announced the U.S. Department of Commerce and BAE Systems Electronic Systems, a business unit of BAE Systems, Inc., have signed a non-binding preliminary memorandum of terms (PMT) to provide approximately $35 million in federal incentives under the CHIPS and Science Act to support the modernization of the company’s Microelectronics Center in Nashua, New Hampshire.

The newly announced partnership in New York State will, according to a statement from the governor’s office, “fund the construction of a cutting-edge High NA Extreme Ultraviolet Lithography Center … that will support the research and development of the world’s most complex and powerful semiconductors.” Industry partners, including Micron, IBM, Applied Materials, Tokyo Electron, and others, will use the center’s advanced semiconductor equipment. These partnerships, the statement said, “will significantly enhance New York State’s position as a leading candidate to secure anchor hub status under the federal National Semiconductor Technology Center, a designation with the potential to unlock more than $11 billion in federal CHIPS and Science Act funding.”

The partnership in New York State could have a significant impact, creating at least 700 new direct jobs and retaining thousands of jobs, according to the governor’s statement. The statement also projected that the partnership would help leverage at least $9 billion in private spending and investment and establish significant commitments to support and build talent development pipelines.

The statement also noted the partnership’s impact on the state’s education system and workforce development programs. There will be partnerships with the State University of New York (SUNY). The industry partners have committed to either expanding or initiating support for workforce development programming, including investments in SUNY, Rensselaer Polytechnic Institute, and other public and private workforce development activities; K-12 STEM academic programs; training, internships, and experiential learning to undergraduate and graduate students in engineering and related STEM fields, and academic research partnerships.

Meanwhile, the U.S. Department of Commerce says the modernization of BAE’s Microelectronics Center will replace aging tools and quadruple the production of chips necessary for critical defense programs, including the F-35 fighter jet program.

The Commerce's PMT with BAE Systems marks the beginning of the next implementation phase of the CHIPS and Science Act. According to an article from Reuters, Commerce Secretary Gina Raimondo said she expects to make about 12 semiconductor chips funding awards within the next year, including multi-billion dollar announcements that could reshape U.S. chips production.

As explained in Commerce’s first Notice of Funding Opportunity, the department may offer applicants a PMT on a non-binding basis after satisfactory completion of the merit review of a full application. The PMT outlines key terms for a CHIPS incentives award, including the amount and form of the award. After the PMT is signed, the department begins a comprehensive due diligence process on the proposed project and other information in the application. After applicants complete a satisfactory due diligence phase, the department may enter into final award documents with the applicant.