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CHIPS Program"The CHIPS Program, which was authorized in 2022 as part of the CHIPS and Science Act, is comprised of two separate components. The first is a $39 billion incentive program to attract the large-scale investment required for reversing the long decline of America’s preeminence in semiconductor production. The second is an $11 billion effort aimed at creating a research and development ecosystem that will sustain long-term U.S. strategic growth by ensuring that the nation remains the global leader in developing new semiconductor technologies.”

Supplemental guidelines for CHIPS Act Application issued March 28, 2023

CHIPS Program Office Releases Additional Funding Application Guidance

Important update March 23, 2023

U.S. Commerce and Treasury Departments Issue Rules on Uses of CHIPS and Science Act Funding to Protect National Security

Recent update on CHIPS Program March 2, 2023

The Department of Commerce (DOC), through the CHIPS Program Office (CPO), issued its first Notice of Funding Opportunity (NOFO) under the CHIPS Incentive Program on February 28, 2023. The NOFO is specifically 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.” Subsequent NOFOs focused on semiconductor materials suppliers and equipment manufacturers and research and development facilities are expected in the late spring and fall, respectively.

Program Priorities  

As articulated by Secretary of Commerce Gina Raimondo in a speech on February 23, the Administration views the CHIPS Program as a mechanism for ensuring America’s long-term capacity to develop and manufacture technologies that are foundational to its economic vitality and, most importantly, its national security. Semiconductors are that foundational technology because they are essential to military superiority (e.g., weaponry, drones, and satellites) and daily life (e.g., autos, phones, and medical devices).

 The overall vision for the CHIPS Program espoused by Secretary Raimondo is reflected in the six evaluative criteria that CPO will use in determining whether an application merits CHIPS funding. These criteria are as follows:

  • Economic and National Security – This criterion is explicitly considered of primary importance and will receive the greatest weight during the application review process. Specific foci include strengthening supply chain resilience, meaningfully increasing U.S. semiconductor production, and meeting government needs for safe, secure, and domestically produced chips.
  • Commercial Viability – This criterion focuses on the applicant’s demonstrated understanding of future demand for existing and potential customers.
  • Financial Strength – Successful applications will include plans for incentivizing strong private sector investment in the project, with the goal of helping these facilities to be viable without further government assistance. Ultimately, one of the goals of the CHIPS Program is to make subsidies unnecessary in the long run.
  • Technical Feasibility and Readiness – The emphasis in this criterion is balancing creativity with feasibility through a strong project execution plan.
  • Workforce Development – The implementation of the CHIPS Program is intended to serve as a catalyst for spurring the development of a new high-skilled workforce comprised of both college-educated and vocationally trained scientists, engineers, and technicians. Absent such an effort, it is estimated that there will be a shortfall of roughly 90,000 positions in fab operations alone by 2030.
  • Broader Impacts – The CHIPS Program is committed to leveraging its resources to build strong communities around funded projects. To that end, applications must address how projects will provide positive impacts beyond an increased manufacturing capacity.
     

Funding Information

The CHIPS Incentive Program has up to $38.22 billion available in direct funding to support awards made through this NOFO, with these funds accounting for 5-15 percent of total capital expenditures for any given project. 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. Additionally, the Program has up to $75 billion in direct loan or guaranteed principal. Taken together, total CHIPS incentives are expected to account for no more than 35 percent of total project capital expenditures.
 

Application Information

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 CPO to gauge interest in the program, 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 start a dialogue with applicants and provide feedback prior to the submission of full applications. Leading-edge project applicants may submit pre-applications starting March 31, while current-generation, mature-node applicants will be able to do so starting May 1. The decision was made to start with leading-edge applications because of the time it will take to review them, but CPO was careful to note that this does not mean that there is a risk to such projects receiving all the available funding.
  • Full Application – This will be the application that is merit reviewed and will include the most comprehensive project proposals. The earliest submission date for leading-edge applicants is March 31 while current-generation, mature-node, and back-end applications may be submitted starting June 26.
  • Due Diligence – If CPO determines that an application merits funding, it will work with the applicant on a Preliminary Memorandum of Terms and begin validating national security, financial, and other information.
  • On National Environmental Policy Act (NEPA) Requirements: Meeting NEPA requirements is a critical part of the successful application process. CPO encourages applicants to start working on NEPA requirements now so that they can produce the necessary environmental studies in a timely manner and help DOC expedite the NEPA process.
  • Award Issuance – Following due diligence, CPO will prepare and issue awards for applications selected for funding. Funds will not be dispersed in one lump sum, but will instead be spread over multiple dispersals tied to specific project milestones. These milestones will vary by project and will be determined during the application process.

Supplemental Application

Today, the CHIPS Program Office (CPO) released a series of supplemental materials intended to provide additional guidance for CHIPS funding applicants. SEMI previewed these materials in our initial summary of the Notice of Funding Opportunity (NOFO) for commercial fabrication facilities.

  1. Pre-Application Materials – The Pre-Application is optional but strongly recommended because it will enable CPO to start a dialogue with applicants and provide feedback prior to the 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 starting May 1. Specific materials released include the following:
  2. Full Application – This will be the application that is merit reviewed and will include the most comprehensive project proposals. The earliest submission date for leading-edge applicants is March 31 while current-generation, mature-node, and back-end applications may be submitted starting June 26. Specific materials released include the following:
  3. Workforce Development – Applications must include a workforce development plan that aligns with the Administration’s “Good Jobs Principles”; enables the recruitment, hiring, training, and retention of a diverse and skilled manufacturing and construction workforce; proactively includes women and economically disadvantaged individuals; engages with community partners, including leading labor unions, other workforce development organizations, and educational institutions; and provide access to affordable, accessible, reliable, and high-quality childcare for facility and construction workers. The CHIPS Program Office has released a Workforce Development Planning Guide as a resource for NOFO applicants.

In addition to these resources, the CHIPS Program Office has announced a series of webinars that will provide prospective applicants the opportunity to ask questions directly to Program officials.

Sources and Additional Information