When speculation broke last week about Qualcomm’s potential takeover of struggling Intel, the consensus question posed by financial analysts and media wizards became: “Who wants Intel’s foundry service business?”
Chip industry observers are resorting to the warmed-over conviction that semiconductor companies seeking profitability should forget about manufacturing chips. Leave it to someone else.
Qualcomm is likely not interested in producing its own chips. But that isn’t the issue. At stake is that the whole industry appears to have forgotten lessons learned during the pandemic.
In several recent dialogs with Commerce Department officials, the Ojo-Yoshida Report sought to understand the implications of the CHIPS and Science Act. We asked about business plans and pragmatic tools that Commerce might apply to its lofty goal of bringing chip production back to the United States.
Under the CHIPS and Science Act, $39 billion is being allocated for manufacturing incentives, and $11 billion toward semiconductor R&D programs.
The United States has got to stop thinking about manufacturing as not being a research endeavor.
Richard-Duane Chambers
We talked this month with two Commerce leaders responsible for the “Science” part of the legislation. Jay Lewis is director of the National Semiconductor Technology Center (NSTC) Program. Richard-Duane Chambers directs policy and integration at NIST (National Institute of Standards and Technology) CHIPS R&D Office.
Lewis and Chambers explained that the essence of the CHIPS and Science Act is the idea to “pair research and manufacturing to create a robust innovation ecosystem” — Lab to Fab.
Chambers stressed, “The United States can’t just be the research leader. You can’t publish the research and decide to put it on a shelf and have it not go anywhere. That’s one of the major things that drove the CHIPS and Science Act, We’ve got to stop thinking about manufacturing as not being a research endeavor.”
Our latest video podcast interview with Lewis and Chambers is here:
What about Intel?
To be clear, although Intel might get as much as $8.5 billion in CHIPS and Science Act funding, it might not receive the full amount.
Indeed, the CHIPS Office at Commerce will not discuss individual companies designated for CHIPS and Science Act funding. During our interviews, representatives repeatedly emphasized that Commerce’s goal is to make the best use of taxpayers’ money and serve the public interest, even — although this was never expressed — at Intel’s expense.
Lynelle McKay, chief of portfolio management officer at the CHIPS Office, noted during her keynote at the Business of Semiconductor Summit, that the actual delivery of money depends on each company clearing milestones agreed to with the Department of Commerce. (Register here free to watch McKay’s keynote on demand.)
Intel confirmed last week that it’s eligible to receive as much as $3 billion from the US government to manufacture chips for the military. The effort, called “Secure Enclave,” aims to reliably supply cutting-edge chips for defense and intelligence purposes.
This award is separate from a possible $8.5 billion grant from the 2022 Chips and Science Act that would support Intel’s commercial factories across four states. In a separate statement Monday, Intel said that those projects continue to make progress.
Indeed, Commerce confirmed that Intel “received this award pursuant to a separate process” from the original NOFO — “Notice of Funding Opportunity: Commercial Fabrication Facilities” — issued by Commerce more than a year ago in June, 2023.
The biggest semiconductor R&D program
Neither Lewis nor Chambers is exactly a bureaucratic drone.
Jay Lewis, who joined Commerce a year ago, heads a public-private consortium called the National Semiconductor Technology Center (NSTC). Besides his three years as deputy director of DARPA’s microsystems technology office, Lewis, most recently, was a partner in silicon projects at Microsoft.
Lewis explained the roles of NSTC, a new consortium established by the CHIPS and Science Act of the U.S. government, include conducting research and prototyping of advanced semiconductor technology and expanding the domestic semiconductor workforce to strengthen the competitiveness and security of the domestic supply chain.
Before joining the NIST CHIPS and R&D Office, Richard-Duane Chambers was a senior staffer for the Senate Commerce Committee, dedicated to ensure that the CHIPS and Science Act passed as a bipartisan legislation.
While Commerce’s investment team at CHIPS Office has announced investments of more than $30 billion in 16 private semiconductor manufacturing facilities, the team responsible for R&D programs only started releasing of initial R&D funding opportunities last June.
Asked about how NSTC is going to fund itself, Lewis explained, “Federal funding is necessary to kickstart NSTC programs. But the amount of federal funding needed to sustain it decreases over time.” He added, “We pursue private investments through membership fees, usage fees, collaborative research programs.”
Lewis noted, “We are rolling out our membership campaign shortly.”
Government programs often consist of various projects and administrative offices that compose an alphabet soup ranging from NIST (National Institute of Standards and Technology) and NSTC (National Semiconductor Technology Center) to NATCAST (National Center for the Advancement of Semiconductor Technology – an operator of NSTC) and NAPMP (National Advanced Packaging Manufacturing Program).
Both Lewis and Chambers, during the interview, clarified the difference between DARPA (Defense Advanced Research Projects Agency, an R&D arm of Defense Department) and the DOD under CHIPS and Science Act funding. DARPA got money, DOD got none.
Lewis explains, “The mission of DARPA is disruption. DARPA does fixed short-term programs to show what’s possible. Meanwhile, Commerce focuses on long-term extended investments to carry out projects all the way through to maturity.”
According to an update from the Semiconductor Industry Association last week:
The CHIPS Act, representing the most significant federal investment ever made in the U.S. semiconductor industry, includes a substantial $13 billion investment over 5 years in chip research and development (R&D) programs between the Department of Commerce ($11 billion) and the Department of Defense ($2 billion).
Specific R&D funding opportunities spelled out during our interview with Lewis and Chambers include:
• CHIPS Metrology Program Small Business Innovation Research
• CHIPS National Advanced Packaging Manufacturing Program, Materials and Substrates R&D
• CHIPS Manufacturing USA Institute
To companies applying for R&D funding opportunities, here’s a tip from Chambers: “In nearly all of our Notice of Funding Opportunities (NOFOs), we focus on programs and places where people work together and collaborate.”
In short, “This is no longer about the individual hero. It’s the partnership.”
Watch the full video above to learn what funding opportunities are available for semiconductor R&D activities.
Separately, the the Biden-Harris Administration announced Wednesday, Sept. 25 the launch of the National Semiconductor Technology Center’s (NSTC) Workforce Center of Excellence (WCoE), a step toward “solving one of the most pressing challenges facing the U.S. semiconductor industry – workforce development,” according to Commerce. Details of that announcement is here.
Related stories:
The Business of Semiconductor Summit: Keynote by Lynelle McKay at Commerce Dept.
Register free for on-demand viewingJunko Yoshida is the editor in chief of The Ojo-Yoshida Report. She can be reached at [email protected].
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