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March 13, 2023

U.S. Commerce Department Opens Application Process for CHIPS Act Funding

Leading-edge project applicants may submit pre-applications starting March 31.

The U.S. Department of Commerce (DOC) on February 28 opened the application process through the CHIPS Program Office (CPO) for the initial tranche of funding under the $52 billion CHIPS Program – marking the first opportunity for SEMI members and other companies in the U.S. semiconductor supply chain to apply.

Kicking off the implementation of the CHIPS Incentive Program, the first Notice of Funding Opportunity (NOFO) is intended to support the “construction, expansion, or modernization of commercial facilities for the front- and back-end fabrication of leading-edge, current-generation, and mature-node semiconductors.” A NOFO targeting semiconductor materials suppliers and equipment manufacturers is expected in late spring 2023, with another NOFO for research and development facilities to follow in the fall.

Authorized in 2022 as part of the CHIPS and Science Act, the CHIPS Program consists of two components. The first is a $39 billion incentive to attract the large-scale investment required to regain American prominence in semiconductor production. The second is an $11 billion effort aimed at creating a research and development ecosystem to help sustain long-term U.S. strategic growth by maintaining the nation’s global leadership in developing semiconductor technologies.

ImageAs articulated by Secretary of Commerce Gina Raimondo in a speech on February 23, the Biden Administration views the CHIPS Program as key in ensuring America’s long-term capacity to develop and manufacture technologies that are foundational to its economic vitality and, most importantly, its national security.

The overall vision for the CHIPS Program espoused by Secretary Raimondo is reflected in the following six criteria the CPO will use to determine whether a NOFO application merits CHIPS funding:

  • Economic and National Security – This criterion is given primacy in the application review process. Focus areas include strengthening supply chain resilience, meaningfully increasing U.S. semiconductor production, and meeting government needs for safe, secure, and domestically produced chips.
  • Commercial Viability – Applicants must demonstrate an understanding of sustainable market demand for the expanded manufacturing capacity that CHIPS funding would help them achieve
  • ImageFinancial Strength – Successful applications will include plans for catalyzing strong private sector investment to help new facilities thrive in the long run survive without government assistance – a chief goal of the CHIPS Program.
  • Technical Feasibility and Readiness – The emphasis in this criterion is balancing ambition with feasibility through a strong project execution plan.
  • Workforce Development – The CHIPS Program is intended to catalyze the development of a high-skilled workforce comprised of both college-educated and vocationally trained scientists, engineers, and technicians – key since current forecasts point to a shortfall of roughly 90,000 positions in U.S. fab operations alone by 2030.
  • Broader Impacts – The CHIPS Program is committed to building strong communities around funded projects. To that end, applications must address how projects will provide positive impacts beyond an increased manufacturing output, including their capacity to spur reinvestment in the domestic semiconductor sector, contribute to the R&D ecosystem, maximize use of renewable energy, and expand the involvement of women-, minority-, and veteran-owned businesses.

The CPO anticipates expects to apply these criteria to subsequent NOFO, including the opportunity focused on the semiconductor materials and equipment sector.

Up to $38.22 billion in direct funding is available through the CHIPS Incentive Program to support NOFO awards, with funds aimed at covering 5-15% of total capital expenditures for any given project. The CPO does not anticipate that the entirety of those funds will be dispersed through this opportunity alone and expects that funding will be available through future opportunities. An additional $75 billion in direct loan or guaranteed principal is also available. Total CHIPS incentives are expected to account for no more than 35% of total project capital expenditures.

The NOFO application process will have five parts:

  • Statement of Interest – Beginning on February 28, 2023, all potential applicants can submit a Statement of Interest (SOI), which will be reviewed on a rolling basis. The SOI will allow the CPO to gauge interest in the program within the industry, assess the types of projects and applicants, and prepare for application review. SOIs must be submitted at least 21 days prior to full applications.
  • Pre-Application – The Pre-Application is optional but strongly recommended because it will enable CPO to provide applicants with feedback prior to their submission of full applications. Leading-edge project applicants may submit pre-applications starting March 31, while current-generation, mature-node, and back-end applicants will be able to do so beginning May 1.
  • ImageFull Application – Full applications will include comprehensive project proposals for merit review. Applications for leading-edge projects can be submitted starting March 31, while current-generation, mature-node, and back-end applications may be submitted beginning June 26.
  • Due Diligence – If the CPO determines that an application merits funding, the office will establish a Preliminary Memorandum of Terms with the applicant and begin validating national security, financial, and other applicant details.
    • National Environmental Policy Act (NEPA): Because meeting NEPA requirements is critical to a successful application, the CPO encourages applicants to immediately start work on conforming to those requirements to allow time for environmental impact studies and to expedite the NEPA process
  • Award Issuance – The CPO will issue awards for applications selected for funding. Funds will dispersed over multiple payouts tied to specific project milestones. These milestones will vary by project and will be determined during the application process.

SEMI encourages potential applicants to review the NOFO in its entirety and to visit CHIPS for America for additional information, including FAQsfactsheets, and webinars. The CPO plans to release comprehensive guidance on workforce development as well as a Notice of Proposed Rulemaking focused on implementing the national security guardrails outlined in the NOFO before the end of March.

SEMI Global Advocacy

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John Cooney is Vice President of Global Advocacy and Public Policy at SEMI.