Do I Qualify for CHIPS Act funding?
We screened over 100 semiconductor companies to determine the 7 most common dealbreakers CHIPS Act grant applicants run into when determining if they qualify for CHIPS Act funding.
Crafting a Competitive CHIPS Act Application
Schedule a complimentary 15-minute session with our CHIPS Act team
Commerce’s CHIPS Act is a nearly $280 billion piece of legislation that is has quickly become one of the most interest grant programs our team has seen. There are dozens of sub-programs and set-asides, from NTIA’s Public Innovation Wireless Fund to Department of Defense’s Microelectronics Commons. For a general overview, we recommend McKinsey’s CHIPS and Science Act: Here’s whats in it. After receiving hundreds of inquries, the Harper Doss Team has published some of its initial findings to help assist potential applicants on if their projects qualify for CHIPS funding.
While Commerce has created the CHIPS Frequently Asked Questions, the Harper Doss Team wanted to publish a easier to read, more user-friendly CHIPS Act checklist to help you determine if your company should apply. As always, we highly encourage potential applicants to fully-review the CHIPS Grant Foundries (Fab) and Upstream Suppliers ($300M+) Notice of Funding Opportunity (“NOFO”) for further details.
1. Asking for too much CHIPS direct funding
Most often, prospective applicants start with one goal: get as much CHIPS Act funding as possible. However, this method usually gives way to applicants not understanding the funding limitations found in the CHIPS NOFO.
While there are variations depending on your CHIPS Act Tranche (Foundry, Supplier, R&D), in general:
- Direct Funding capped at 10-30%: For example, your CHIPS project is estimated to cost $50M yet your team is requesting more than $7.5M+. Commerce has guided 5-15% in direct funding unless an applicant can prove it does not qualify for AMITC or is a national imperative.
- Not utilizing AMITC: While not a requriement, there is a heavy consideration for CHIPS Act applications who make use of the improved Advanced Manufacturing Investment Tax Credit. This allows a 25% direct tax credit.
- Not requesting CHIPS Loans and Loan Guarantees: This is another funding mechanism (5-15%) that the CHIPS Program Office expects to see in $300M+ applications.
2. Not a qualified CHIPS facility type
There are very specific requirements on what type of company qualifies for CHIPS Act funding.
- Foundry/Fabrbication (Covers leading-Edge to Mature Node)
- Back-end Packaging
- Wafer Manufacturers
- Semiconductor Materials
- Semiconductor Manufacturing Equipment
If your company and project is not within one of these categories, your application will be rejected. See Slide 11 in Commerce’s CHIPS Act Guidlines Presentation. For instance, no software development or application development company current qualifies, even if its SPICE models or other semiconductor-related solutions.
3. No Covered Incentive
It is required that each CHIPS applicant to have been offered a qualifying covered incentive. These incentives can range from city matching funds to state grants (such as the Texas CHIPS Act) and may be contingent. Any contingencies will need to clearly documented in your full application.
No Covered Incentive…No CHIPS funding
4. CHIPS Incentive not justified
This one trips up a lot of potential CHIPS Grant applications! Even if your company passes the first three questions, your company still must prove why CHIPS Incentive is critical to your project. If your company already incurred a majority of costs or has no credible evidence that CHIPS funding is critical to your decision, then you most likely will fail this.
Have questions on CHIPS Incentive Justification? Reserve 15 minutes to speak with a CHIPS Act Grant Writer.
5. No Higher Education Committment
See 15 U.S.C. 4652 (a)(2)(B)(III) Applicants are not elgibble for incentives unless they have secured comitments from regional educational and training entities and institutions of higher-educatino to provide workforce training. This requires an applicant to prove how it will partner with above groups to provide workforce training, including programming for training and job placement of economically disadvantaged individuals.
6. Cluster Profile
Sectoral partnerships? Adding to vibrant US clusters and ecosystems? Here an applicant must demonstrate how its project will foster a holistic approach to include key stakeholders including but not limited to: upstream suppliers, training institutions, technical trade schools, workforce boards, industry associations, and various government agencies.
7. Not responsive to CHIPS Merit Criterion
- National Security
- Economic Security
- Commerical Viablity
- Financial Competitiveness
- Project Technical Feasiblity
- Workforce Development
- Broader Impacts
Enhancing the United States’ Economic and National Security position is critical to a successful CHIPS Act application.
With $280 billion at stake and quite possibly the United States’ future position in semiconductor manufacturing, the CHIPS Act is a foundational grant program that is sure to affect change in the industry. Beyond all else, we highly encourage our clients and potential applicants to reserve enough time (6-12 months) in order to maximize your company’s chances of winning CHIPS grant funding.
Harper Doss represents more CHIPS clients than any other firm in the world. From foundries and upstream suppliers to workforce development groups and fabless design companies, the CHIPS team at Harper Doss is comprised of highly-qualified experts who have combined experience in the semiconductor industry and winning government grants for clients. Schedule a complimentary 15-mintue introduction now to learn more.
more posts by this author
Peter
Engagment Partner, CHIPS Grant
Read more on our Blog
Check out the knowledge base collected and distilled by
experienced professionals.
How To Increase Your Chances of Winning Government Grants
Few applicants realize that a brand system can make a material difference in increasing their chances of winning government grants.