On September 29, the CHIPS Program Office (CPO) of the U.S. Department of Commerce (DOC) issued the second of two Notices of Funding Opportunity (NOFOs) targeted toward the semiconductor supply chain. This NOFO will support smaller projects, which CPO defines as being under $300 million in total capital costs. Eligible applicants include those intending to use CHIPS funding to support the construction, expansion or modernization of semiconductor materials and manufacturing equipment production capacity.

CPO will evaluate applications under this current NOFO using five of the six criteria outlined in the February 2023 NOFO for commercial fabrication facilities. The greatest emphasis will be placed on the economic and national security criterion, which encompasses three priorities: supply chain resilience; advancing U.S. technology leadership; and supporting vibrant U.S. fab clusters. Within this criterion, CPO will place the greatest importance on the last of these three priorities for this NOFO. CPO will also judge proposed projects based on commercial viability, financial strength, project technical feasibility and readiness and workforce and community investments. A sixth criterion, broader impacts, is not being viewed as standalone and has instead been folded into workforce and community investments for the purposes of this NOFO.

Available Funding

CPO is setting aside $500 million to fund all the projects awarded under this NOFO. This amount will be disbursed directly in the form of grants, cooperative agreements and other transactions. CPO expects that direct funding will account for no more than 10 percent of the total capital costs of each project, though the Office will consider covering up to 30 percent if the applicant makes a compelling case for additional funding.

Application Process

The application process for this NOFO differs from previous opportunities, comprising a two-phase process that CPO envisioned would be more tailored to the needs and capabilities of smaller businesses.

Concept Plan: Applicants will be asked to submit a concept plan describing how their proposed project addresses core strategic objectives, including U.S. economic and national security. Concept plans will not be considered on a rolling basis and will be accepted between December 1, 2023, and February 1, 2024.

Full Application: DOC will review submitted concept plans and invite the most promising applicants that most compellingly illustrate their ability to advance program priorities to submit a full application for CHIPS incentives. The full application submission dates will be communicated to applicants individually when they are notified of their advancement. As part of the full application, applicants will be required to submit a Workforce and Community Investment Plan that: assesses workforce needs; outlines recruitment, retention and training approaches; demonstrates understanding of and responsiveness to local needs; and prioritizes the inclusion of small, minority-owned, veteran-owned and women-owned businesses in the project. While a childcare plan is encouraged, it is not required since awards issued under this funding opportunity will fall below the $150 million threshold established in the first NOFO.

Emphasis on Consortia

Given the importance that CPO has placed on supporting vibrant U.S. fab clusters, NOFO applicants are highly encouraged, though not required, to apply as part of consortia. According to CPO, a strong consortium will include:

  • At least two suppliers
  • A state or local government entity, which can help strengthen a consortium by taking concrete steps to support and build vibrant clusters through investments in infrastructure, education and workforce training, site preparation, research and development and streamlining permitting requirements
  • An anchor institution, which would typically mean a fab but could also mean a large supplier, university or advanced packaging facility
  • A workforce training provider, labor union, economic development corporation or an institution of higher education.

CPO will require each consortium member to submit its own concept paper and, if invited, full application. If an applicant is intending to be part of a consortium, they will be asked to submit a high-level Consortium Narrative describing the concept, the consortium’s members and strategic vision. Every consortium member can submit the same Consortium Narrative.