More CHIPS: Biden Administration Seeks New Applications for U.S. Semiconductor Production

At a Glance

• The U.S. Department of Commerce announced a new funding opportunity primarily aimed at large semiconductor supply chain projects (i.e., those with capital investments equal to or exceeding $300 million).
• The rolling application process begins on September 1, 2023. 
• The funding derives from the CHIPS and Science Act, which allocated roughly $53 billion to expand semiconductor production in the U.S.

On June 23, 2023, the Department of Commerce (DOC) and the National Institute of Standards and Technology (NIST) announced an expansion to its earlier Notice of Funding Opportunity (NOFO) for Commercial Fabrication Facilities under the CHIPS Incentives Program.

The announcement — part of a larger push by the Biden administration to get funding out the door in advance of the 2024 election — is primarily aimed at large semiconductor supply chain projects (i.e., those with capital investments equal to or exceeding $300 million) and is intended to complement prior NOFOs to incentivize onshoring and reshoring of semiconductor production.

Key Considerations & Takeaways

This latest NOFO maintains a five-part application process, including the submission of (1) a statement of interest; (2) a recommended (but optional) pre-application; (3) a full application; followed by (4) a due diligence investigation; and (5) provisional approval and issuance of the award.

Unlike other NOFOs issued by federal agencies, the DOC has elected to keep this funding path open through a rolling application period for projects that include the “construction, expansion, or modernization of semiconductor materials and manufacturing equipment facilities for which the capital investment equals or exceeds $300 million.” Accordingly, the following deadlines will apply:

• September 1, 2023 – The DOC will begin accepting pre-applications on a rolling basis for semiconductor materials and manufacturing equipment facilities, as well as wafer manufacturing facilities, that exceed capital expenditure of $300 million. 
• October 23, 2023 – The DOC will begin accepting full applications on a rolling basis.

Similar to prior NOFOs, the DOC has placed conditions upon any award that may result from an application, including adherence to project construction timelines, restrictions on technology transfers, and “a plan for access to childcare for facility and construction workers, e.g., through on- or near-site childcare, pre-arranged agreements with existing childcare providers, childcare subsidies, or other similar measures.” Other conditions exist and should be weighed before submitting a full application. 

Per the announcement, DOC is also expected to release a separate expansion of the NOFO in the fall of 2023 that will seek “applications for semiconductor materials and manufacturing equipment facilities with capital investments below $300 million.” The DOC has indicated that this application process will be tailored for small and medium sized business.

For More Information

For more information on any of the above issues or more insight on the CHIPS Act, please contact any one of the authors of this alert.