Under the Creating Helpful Incentives to Produce Semiconductors for America and Science Act of 2022 (CHIPS Act), the US Department of Commerce is currently accepting project concept plan submissions from small-scale suppliers through its application portal through February 1, 2024. This is the second CHIPS Incentive Program Notice of Funding Opportunity (NOFO).
Second CHIPS Act NOFO Priorities
This NOFO is specifically designed for smaller-scale projects, with capital investment below $300 million, that involve constructing, expanding, or modernizing semiconductor materials and manufacturing equipment facilities.
The CHIPS Program Office (CPO) has reserved up to $500 million under this NOFO and expects that funding awards will typically be 10% of a project’s capital expenditures and cap at 30%.
The CPO has laid out three overarching economic and national security objectives for investments in semiconductor materials and manufacturing equipment facilities:
- Support vibrant US clusters that bring together fabrication plants, suppliers, and a diverse, skilled workforce
- Strengthen supply chain resilience
- Advance US technology leadership in semiconductor materials and manufacturing equipment
US Semiconductor Cluster Support
This NOFO is focused on applications that advance clusters by closing critical gaps in the US supplier landscape. If a project doesn’t support a cluster, the application must make a compelling case for advancing one of the Department of Commerce’s other two objectives.
Encouragement to Apply Within a Consortium
The CPO recommends that projects supporting US fabrication form clusters consider applying as part of a consortium that promotes the development and sustainability of semiconductor clusters. The CPO outlines an example of successful consortia to include at least two suppliers, a state or local government entity, and an anchor institution such as a semiconductor fabricator.
Other members may include workforce training providers, labor unions, economic development corporations, institutions of higher education, philanthropic foundations, industry organizations, or other relevant entities.
This NOFO will include a two-phased application process, a concept plan describing how the proposed project addresses core program priorities followed by a full application if invited to submit one by the CPO.
The concept plan requires an applicant to describe and demonstrate how the proposed project will meet the core program priorities. Concept plans will be reviewed and scored based on the following criteria:
- How the project will advance US economic and national security by supporting vibrant US fabrication clusters, strengthening supply chain resilience, or advancing US technology leadership
- Long-term commercial viability, including demonstrating robust customer demand for the proposed project output
- Strength and plausibility of applicant’s justification on how the requested CHIPS incentives will incentivize the applicant to make investments in facilities and equipment in the United States that wouldn’t occur otherwise
- Likelihood that the applicant will successfully execute the proposed projects, including an assessment of the experiences of the applicant and the extent to which the applicant has a viable plan to complete the required construction and manage the environmental review process
- Availability and credibility of non-CHIPS funding sources for the project
Concept plans will be accepted through February 1, 2024. Once reviewed the CPO will invite the most promising applicants, based on the above stated criteria, to the full application phase and communicate the submittal dates to those selected.
Other CHIPS Act NOFOs
The CPO has already issued and amended its first NOFO and a third is expected in the upcoming months. The CPO is also accepting funding applications under the previously announced first NOFO. These will be accepted on a rolling basis and considered in the order received.
The CPO’s first funding opportunity seeks applications for projects for the construction, expansion, or modernization of commercial facilities for the fabrication of leading-edge, current-generation, and mature-node semiconductors.
Amended First NOFO
The CPO expanded the eligibility of the first NOFO to include projects for construction, expansion, or modernization of commercial facilities for semiconductor materials and manufacturing equipment, for which the capital investment equals or exceeds $300 million.
A NOFO supporting the construction of semiconductor R&D facilities, was originally scheduled for an announcement in fall 2023. Updated timing is yet to be released.
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For more information on how this guidance could impact your business or if you have questions related to tax credits and incentives, contact your Moss Adams professional.