On February 28, 2023, the National Institute of Standards and Technology’s (NIST’s) CHIPS Program Office published the first Funding Opportunity Announcement (FOA) under the CHIPS and Science Act (for background on this Act, see Wilson Sonsini’s prior alert, here). This initial FOA is directed towards funding the construction, expansion, or modernization of commercial facilities for the front- and back-end fabrication of leading-edge, current-generation, and mature-node semiconductors. Those interested in obtaining funds should review the FOA and related documentation at https://www.nist.gov/chips/notice-funding-opportunity-commercial-fabrication-facilities. Further FOAs focused on funding opportunities for facilities that build semiconductor materials and manufacturing equipment and facilities that support semiconductor research and development will be released later this year. A brief outline of the eligibility requirements, application process, and evaluation criteria for this initial FOA are set forth below:
What Type of Funding Is Available?
The U.S. Department of Commerce will provide funding as a combination of direct funding (e.g., grants, cooperative agreements, or other transactions), loans, and/or loan guarantees. CHIPS awards are meant to complement private investment and other sources of funding, so the anticipated total amount of an award, inclusive of direct funding and the principal amount of a loan or loan guarantee, will not exceed 35 percent of project capital expenditures, with direct funding accounting for between 5-15 percent of project capital expenditures.
Who Can Apply?
Any nonprofit entity, private entity, consortium of private entities, or consortium of nonprofit, public, and private entities with a demonstrated ability to substantially finance, construct, or expand a facility covered by the FOA is eligible to apply. According to the FOA, while, generally speaking, applicants should be domestic legal entities, in “exceptional cases” at the sole discretion of the Department of Commerce, a foreign entity may be permitted to apply and receive a CHIPS award.
What Is the Application Process?
The FOA sets forth a five-stage application process:
All interested applicants must first submit a statement of interest. The statement of interest must be submitted at least 21 days prior to submission of either a pre-application or a full application. The required elements of the statement of interest are available here.
Applications (pre-applications are optional for leading-edge projects) for leading-edge facilities will be accepted on a rolling basis starting March 31, 2023. For current-generation, mature-node and back-end production facilities, pre-applications (which are recommended) will be accepted on a rolling basis starting on May 1, 2023, and full applications beginning on June 26, 2023.
Interested applicants must also register at https://www.sam.gov.
How Will Applications Be Evaluated?
There are six areas of evaluation, the first being weighted most heavily and the five others being weighted approximately equally.
Will There Be Other Funding Opportunities?
The CHIPS Program Office anticipates two additional funding opportunities. One in late spring 2023, focused on the construction, expansion, or modernization of facilities for semiconductor materials and manufacturing equipment is expected. The other, in early fall 2023, for the construction, expansion, or modernization of facilities for research and development is expected.
This first CHIPS FOA presents a great opportunity for semiconductor companies to obtain federal funding to build or expand operations. Parties who seek to apply for funding under this FOA should ensure they understand and can meet the requirements of the FOA and interested parties should continue to monitor nist.gov/chips for more information on this and future FOAs. For more assistance from Wilson Sonsini attorneys concerning this FOA or other CHIPS Act issues, please contact Joshua Gruenspecht, Barath Chari, Seth Cowell, or other members of the firm's national security, employment litigation, technology transactions, or strategic risk and crisis management practices.