① The U.S. Department of Commerce quietly announced this week that it will provide over $870 million in federal incentive funding to the semiconductor manufacturing sector in exchange for minority equity stakes in seven companies; ② These funds will support research and development in critical technologies and advanced integrated photonics, as well as computing architectures and memory systems designed for computing and artificial intelligence applications.
Caixin Global, July 31 (Editor Bian Chun) — The U.S. Department of Commerce quietly announced this week that it will provide over $870 million in federal incentive funding to the semiconductor manufacturing sector in exchange for minority equity stakes in seven companies.
On Wednesday, the National Institute of Standards and Technology (NIST) stated in a blog post that the CHIPS Research and Development Office, under the Department of Commerce, has signed letters of intent with seven companies to provide a total of $874 million in federal funding under the landmark CHIPS and Science Act.
According to NIST, these funds will support research and development in critical technologies and advanced integrated photonics—a microchip technology that uses light instead of electricity to transmit and process data. Additionally, the funds will also support R&D in computing architectures and memory systems tailored for computing and artificial intelligence applications.
“As a condition of receiving the funds, the Department of Commerce will acquire a minority, non-controlling equity stake in each company to enhance returns on U.S. taxpayers’ investment,” NIST wrote.
Among them, semiconductor manufacturers $GlobalFoundries (GFS.US)$ will receive up to $300 million to strengthen research and development of next-generation silicon photonics technology. Kepler will receive up to $245 million to develop new AI memory technologies.
NIST stated that Multibeam Corp., which specializes in maskless semiconductor lithography, will receive up to $140 million to develop advanced chip packaging equipment; the remaining funds will be allocated to novel processor chip manufacturer Extropic, PCB substrate producer Thintronics, thermal imaging sensor manufacturer Obsidia Semiconductors, and optoelectronic and electronic device manufacturer $Aeluma Inc (ALMU.US)$ , with each company receiving between $30 million and $75 million for multiple projects spanning low-power computing technologies, advanced chip materials, and detection systems capable of identifying counterfeit components.
U.S. Secretary of Commerce Howard Lutnick said in a press release: “These strategic investments will enhance domestic industrial capabilities, create high-paying jobs, and sustain America’s leadership in the semiconductor industry.”
Nearly a year ago, the Trump administration reached an agreement with $Intel (INTC.US)$ to invest $8.9 billion in Intel, acquiring a 9.9% stake in the company. The investment was funded using $5.7 billion in previously awarded but un-disbursed subsidies under the CHIPS and Science Act, along with an additional $3.2 billion in government project funding. Following the successful completion of the transaction, the U.S. government became a major shareholder in Intel.
This approach sparked considerable controversy, even drawing criticism from Trump’s fellow Republicans. Senator Todd Young of Indiana, one of the authors of the CHIPS and Science Act, stated at the time that the legislation was never intended to allow the federal government to hold a significant equity stake in Intel or any other large corporation.
This legislation, signed into law by former President Biden in 2022, aims to boost U.S. semiconductor production by providing federal subsidies to domestic chip manufacturers.
Despite strong opposition last summer, the Trump administration awarded $150 million in federal incentives to xLight, a startup developing laser technology, under the CHIPS and Science Act in December last year, acquiring equity in the company as part of the deal.
This 'government equity stake' model has also appeared in other strategic sectors, such as critical minerals and quantum computing. In May this year, the U.S. Department of Commerce announced it would provide $2 billion in grants to nine quantum computing companies, with the associated agreements including provisions for the U.S. government to acquire equity stakes.
Editor/KOKO