VISION FOR SUCCESS:

COMMERCIAL FABRICATION 

FACILITIES

CHIPS Incentives Program

February 28, 2023 
for AMERICA

CHIPS.gov

CHIPS for America includes the CHIPS Program Office, responsible for 

semiconductor incentives, and the CHIPS Research and Development Office, 

responsible for the R&D programs, that both sit within the National Institute of 

Standards and Technology (NIST) at the Department of Commerce. 

NIST promotes U.S. innovation and industrial competitiveness by advancing 

measurement science, standards, and technology in ways that enhance 

economic security and improve our quality of life. NIST is uniquely positioned 

to successfully administer the CHIPS for America program because of the 

bureau’s strong relationships with U.S. industries, its deep understanding of the 

semiconductor ecosystem, and its reputation as fair and trusted. 

Visit https://www.chips.gov to learn more.
CHIPSfor AMERICA

CHIPS.gov

Vision for Success:

Commercial 

Fabrication 

Facilities

CHIPS Incentives Program

February 28, 2023

TABLE OF CONTENTS

EXECUTIVE SUMMARY .............................................................................................................................. 1

INTRODUCTION ............................................................................................................................................. 3

LEADING-EDGE LOGIC ............................................................................................................................... 4

ADVANCED PACKAGING ............................................................................................................................... 6

LEADING-EDGE MEMORY ............................................................................................................................... 9

CURRENT-GENERATION AND MATURE-NODE SEMICONDUCTORS ...................................... 9

CONCLUSION ............................................................................................................................................ 11

ENDNOTES ............................................................................................................................................ 12
CHIPSfor AMERICA 

1

EXECUTIVE SUMMARY

Semiconductors are integral to America’s economic 

and national security, powering our consumer electronics, automobiles, data centers, critical infrastructure, and virtually all military systems. Yet while the 

United States remains a global leader in semiconductor design and research and development (R&D), it 

has fallen behind in manufacturing and now accounts 

for only about 10 percent of commercial global 

production. Today, none of the most advanced logic 

and memory chips—the chips that power PCs, smartphones, and supercomputers—are manufactured at 

commercial scale in the United States.

In addition, many elements of the semiconductor 

supply chain are geographically concentrated, leaving 

them vulnerable to disruption and endangering the 

global economy and U.S. national security. Moreover, 

because continued investment in manufacturing 

technology and related R&D improves technical 

knowledge and spurs virtuous cycles of innovation, 

America’s lack of production capacity also jeopardizes 

its technology leadership and ability to compete globally over the long term.

Against this backdrop, the U.S. Department of 

Commerce’s CHIPS Program Office has released its 

first funding opportunity, which seeks applications for 

projects for the construction, expansion, or modernization of commercial facilities for the front- and backend fabrication of leading-edge, current-generation, 

and mature-node semiconductors. This document lays 

out the CHIPS Program Office’s “Vision for Success” 

for these investments. Later in 2023, the CHIPS 

Program Office will release separate funding opportunities for semiconductor materials and manufacturing 

equipment facilities, and for R&D facilities.

In releasing this document, the CHIPS Program Office 

has three principal aims: 

1. to help applicants develop proposals consistent with program goals; 

2. to explain program ambitions to a broader set 

of stakeholders, including customers, workers, universities, investors, Congress, state and 

local governments, allies and partners, and the 

wider economic and national security communities; and 

3. to offer the public a clear sense of where 

their tax dollars will go as the federal government begins to execute on an investment in 

American industry of a scale and ambition 

that is unprecedented in our recent history. 

The CHIPS Program Office’s vision for success involves 

meeting the following objectives by the end of the 

decade:

Leading-Edge Logic: The United States will have at 

least two new large-scale clusters of leading-edge 

logic fabs, where clusters are geographically compact 

areas with multiple commercial-scale fabs owned and 

operated by one or more companies; a large, diverse, 

and skilled workforce; nearby suppliers; R&D facilities; 

utilities; and specialized infrastructure. Each cluster 

will have the scale, infrastructure, and other competitive advantages required to ensure that chipmakers 

view continued expansion in the United States as 

economically attractive and core to their business 

models, even in the absence of future funding from 

the CHIPS Program Office. Further, U.S.-based workers will develop and scale the process technologies 

underlying future generations of logic chips; each 

CHIPS-funded fab will be supported by an ecosystem 

of reliable suppliers committed to operating and innovating in the United States; and the U.S. Department 

of Defense and national security community will have 

access to secure leading-edge logic chip manufacturing in a commercial production environment in the 

United States.

Advanced Packaging: The United States will be home 

to multiple high-volume advanced packaging facilities. 

In addition, the United States will be a global technology leader in commercial-scale advanced packaging 

for both logic and memory chips, and semiconductors 

produced by CHIPS-funded fabs will have multiple 

options for packaging services, including from both 

U.S.-based facilities and other facilities in diverse locations outside of countries of concern. 

Leading-Edge Memory: U.S.-based fabs will produce 

high-volume leading-edge dynamic random-access 

memory (DRAM) chips on economically competitive 

terms. In addition, R&D for next-generation memory 

technologies critical to supercomputing and other 

applications will be conducted in the United States.
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Current-Generation and Mature-Node 

Semiconductors: The United States will have 

increased its production capacity for the currentgeneration and mature-node chips most vital to U.S. 

economic and national security. The United States 

will increase production of and maintain technology 

leadership in compound semiconductors and other 

specialty chips. The United States will also coordinate 

with its allies and partners to ensure resilient production of and access to current-generation and maturenode chips, and chipmakers will be able to respond 

more nimbly to supply and demand shocks.

The funding the CHIPS Program Office is charged 

with administering represents a small fraction of the 

investments necessary to realize this vision for success. Trade-offs will be necessary. Not every applicant 

will receive funding, and many projects will not receive 

as much support as applicants request. Moreover, 

although the CHIPS Program Office is launching its 

first funding opportunity amid a cyclical downturn 

in the industry, CHIPS funding will not be used as a 

crutch to help companies endure temporary slumps. 

Instead, the CHIPS Program Office will be laserfocused on advancing U.S. economic and national 

security objectives.

The CHIPS Program Office is clear-eyed about the 

scale of the challenge it faces. It will not be easy to 

rebuild a highly complex manufacturing industry that 

has been declining for decades in the United States. 

Success will require long-term ambition: building 

a domestic semiconductor ecosystem, revitalizing 

American manufacturing, and training the next generation of scientists, engineers, and technicians.

To meet this challenge, the CHIPS Program Office 

has identified nine cross-cutting themes to guide its 

implementation efforts. These are: 

1. catalyzing private investment;

2. encouraging customer demand; 

3. engaging with U.S. partners and allies;

4. building a skilled and diverse workforce;

5. reducing time-to-build;

6. reducing costs through innovation;

7. promoting the operational security, supply 

chain security, and cybersecurity of CHIPSfunded facilities; 

8. spurring regional economic development and 

inclusive economic growth; and 

9. enforcing guardrails.

Success across these themes will help ensure that 

CHIPS funding promotes U.S. leadership in chipmaking, enhances stability in the semiconductor supply chain, and advances U.S. economic and national 

security. 
CHIPSfor AMERICA 

3

INTRODUCTION

The CHIPS and Science Act of 2022 appropriates $52.7 billion in funding to the Department 

of Commerce, the Department of Defense, the 

Department of State, and the National Science 

Foundation to advance U.S. leadership in the semiconductor industry.1

 The CHIPS Program Office within the 

Department of Commerce is responsible for administering $39 billion to support semiconductor production in the United States pursuant to Section 9902 

of Title XCIX—Creating Helpful Incentives to Produce 

Semiconductors for America of the William M. (Mac) 

Thornberry National Defense Authorization Act for 

Fiscal Year 2021 (CHIPS Act).2 Of the $39 billion, the 

Department can allocate up to $6 billion to support 

loans and loan guarantees to covered entities, which 

could be leveraged to support a $75 billion credit 

program. 

Today, the CHIPS Program Office released its first 

funding opportunity, which seeks applications for projects for the construction, expansion, or modernization 

of commercial facilities for the front- and back-end 

fabrication of leading-edge, current-generation, and 

mature-node semiconductors. This document outlines 

the CHIPS Program Office’s “Vision for Success” for 

these investments.

Later in 2023, the CHIPS Program Office will release 

separate funding opportunities for semiconductor 

materials and manufacturing equipment facilities, 

and for R&D facilities. In addition, the Department of 

Commerce will release a strategy for the implementation of the National Semiconductor Technology 

Center, a key component of the $11 billion appropriated to the Department for semiconductor R&D under 

Section 9906 of the CHIPS Act.3

Semiconductors, or chips, are integral to 

America’s economic and national security. They have 

allowed humans to land on the moon, ushered in the 

era of personal computing, placed the internet in our 

pockets, and enabled long-distance mobile communication. Smaller than a postage stamp, with individual 

transistors no larger than a few strands of DNA, chips 

are key inputs to more than 300 downstream sectors—telecommunications, medical devices, and car 

manufacturing, among many others—that together 

account for more than 26 million American jobs.4 They 

also underpin our critical infrastructure, from satellite 

communications to cellular connectivity; power virtually all military technology; and are foundational to 

the advanced technologies that will shape our future, 

including artificial intelligence, biotechnology, and 

clean energy. 

Developed by scientists in the United States and 

brought to market by U.S.-based workers, semiconductors are a testament to U.S. innovation and strong 

public-private partnerships.5 Indeed, U.S. government 

funding helped to shape the nascent semiconductor 

market at the height of the Cold War.6 Yet although 

the United States remains a global leader in chip 

design and R&D, it has fallen behind in manufacturing and today accounts for only roughly 10 percent 

of commercial global production.7 Even in leadingedge production, a long-time strength of American 

chipmakers, the United States has fallen behind. The 

most advanced logic and memory chips—the chips 

that power PCs, smartphones, and supercomputers—

are now all manufactured at commercial scale in East 

Asia.8

The geographic concentration of production—which 

characterizes not just leading-edge manufacturing but 

many elements of the supply chain—leaves international supply chains vulnerable to disruption, endangering the global economy and U.S. national security. 

Chip shortages can have devastating ripple effects, 

as demonstrated by recent chip-related production shortfalls in automobiles, consumer electronics, 

and medical devices.9 Moreover, because continued 

investment in manufacturing technology and related 

R&D improves technical knowledge and spurs virtuous cycles of innovation, America’s lack of production 

capacity also jeopardizes its technology leadership 

and ability to compete globally over the long term.
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4

In June 2021, pursuant to Executive Order 14017, 

“America’s Supply Chains,” the Department of 

Commerce issued a report identifying risks in the 

semiconductor manufacturing and advanced packaging supply chains.10 In January 2022, the Department 

of Commerce published the results from its Request 

for Information on the semiconductor supply chain, 

which underscored the fragility of the semiconductor supply chain.11 After the passage of the CHIPS and 

Science Act of 2022, the Department of Commerce 

released “A Strategy for the CHIPS for America Fund,” 

describing its approach to implementing CHIPS funding to catalyze long-term growth in the domestic 

semiconductor industry and advance economic and 

national security.12

Against this backdrop, the CHIPS Program Office has 

released its first funding opportunity, which will focus 

on projects for the construction, expansion, or modernization of commercial fabrication facilities. This 

document outlines the CHIPS Program Office’s vision 

for success for these investments across four categories: leading-edge logic; advanced packaging; leadingedge memory; and current-generation and maturenode semiconductors. 

In releasing this document, the CHIPS Program Office 

has three principal aims: 

1. to help applicants develop proposals consistent with program goals; 

2. to explain program ambitions to a broader set 

of stakeholders, including customers, workers, universities, investors, Congress, state and 

local governments, allies and partners, and the 

wider economic and national security communities; and 

3. to offer the public a clear sense of where 

their tax dollars will go as the federal government begins to execute on an investment in 

American industry of a scale and ambition 

that is unprecedented in our recent history. 

The funding the CHIPS Program Office is charged with 

administering is an enormous sum in absolute terms, 

but it represents a small fraction of the investments 

necessary to realize this vision for success. Trade-offs 

will be necessary. Not every applicant will receive 

funding, and many projects will not receive as much 

support as applicants request. Moreover, although 

the CHIPS Program Office is launching its first funding opportunity amid a cyclical downturn in the 

industry, CHIPS funding will not be used as a crutch 

to help companies endure temporary slumps. Instead, 

the CHIPS Program Office will be laser-focused 

on advancing U.S. economic and national security 

objectives.

The CHIPS Program Office is clear-eyed about the 

scale of the challenge it faces. It will not be easy to 

rebuild a highly complex manufacturing industry that 

has been declining for decades in the United States. 

But the CHIPS Program Office believes that this country—bolstered by its unbridled innovation and diversity of talent—is up to the task. Success will require 

long-term ambition: building a domestic semiconductor ecosystem, revitalizing American manufacturing, 

and training the next generation of scientists, engineers, and technicians.

To meet this challenge, the CHIPS Program Office 

has identified nine cross-cutting themes to guide its 

implementation efforts. These are:

1. catalyzing private investment; 

2. encouraging customer demand; 

3. engaging with U.S. partners and allies; 

4. building a skilled and diverse workforce; 

5. reducing time-to-build; 

6. reducing costs through innovation;

7. promoting the operational security, supply 

chain security, and cybersecurity of CHIPSfunded facilities; 

8. spurring regional economic development and 

inclusive economic growth; and 

9. enforcing guardrails.

Success across these themes will help ensure that 

CHIPS funding promotes U.S. leadership in chipmaking, enhances stability in the semiconductor supply chain, and advances U.S. economic and national 

security. 

Leading-Edge Logic

U.S. economic and national security depends on our 

ability to design and produce leading-edge logic 

chips. These advanced chips power our computers, 

smartphones, servers, and supercomputers. They are 

increasingly foundational to U.S. critical infrastructure 

and to military modernization efforts. And they will be 

essential to the technologies of the future, from artificial intelligence to biotechnology to clean energy.
CHIPSfor AMERICA 

5

Today, all commercial production of leading-edge 

logic chips occurs in East Asia, but this is a recent 

development.13 East Asian chipmakers have surpassed 

the United States in both process technology—the 

manufacturing methods that allow engineers to fit 

more transistors and other electronic components 

onto a single chip—and scale, attracting a broad 

customer base that has supported their continued 

expansion and innovation. This is in part due to the 

“pure-play foundry” business model pioneered by 

East Asian firms. Unlike integrated device manufacturers, which design and manufacture their own chips, 

pure-play foundries manufacture chip designs from a 

variety of customers on a contract basis. As a result, 

many American firms have become “fabless,” leading 

the world in semiconductor design while outsourcing 

manufacturing to East Asian foundries.14 

U.S. strength in chip design is a key commercial and 

strategic asset, but the decline in U.S. manufacturing—and subsequent geographic concentration—has 

created supply chain vulnerabilities. It has also eroded 

U.S. technology leadership: Without fabs, it is difficult 

to build the domestic manufacturing know-how that 

helps spur innovations in process technology and 

related advancements in chip design. A core priority 

for the CHIPS Program Office is to help the United 

States once again produce the most advanced chips 

at competitive scale on a sustainable basis, either 

through the pure-play foundry model or alternative 

models that allow companies to manufacture chips at 

scale.

Accordingly, the CHIPS Program Office has set the following objectives: 

By the end of the decade, the United States will have 

at least two new large-scale clusters of leading-edge 

logic fabs. For this purpose, the CHIPS Program Office 

defines a cluster as a geographically compact area 

with multiple commercial-scale fabs owned and operated by one or more companies; a large, diverse, and 

skilled workforce; nearby suppliers to the semiconductor industry; R&D facilities; utilities; and specialized 

infrastructure, such as chemical processing and water 

treatment facilities. Given the importance of continued 

U.S. capability in logic chip production and the rapidly 

changing competitive landscape in advanced logic 

chip production, relying on a single cluster presents 

serious risks. The CHIPS Program Office thus expects 

to focus its leading-edge logic investments on at least 

two clusters where companies are manufacturing 

highly advanced chips in the United States.

Each leading-edge cluster will have the scale, 

infrastructure, and other competitive advantages 

required to ensure that chipmakers view continued expansion in the United States as economically 

attractive and core to their business models, even 
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6

in the absence of future funding from the CHIPS 

Program Office. The CHIPS Program Office will evaluate applications based on the extent to which the 

applicant makes credible commercial commitments 

to ongoing private investment in the United States. 

The CHIPS Program Office will also aim to ensure that

each U.S. cluster has sufficient scale to drive down 

the cost of future capacity expansions and strongly 

encourages applicants to explore other innovative 

ways of driving down costs in the long term. In addition, the CHIPS Program Office will encourage fabless 

firms and original equipment manufacturers to prioritize supply chain security by increasing their demand 

for domestically produced chips. 

U.S.-based workers will develop and scale the process technologies underlying future generations 

of logic chips. Applicants will be asked to submit 

strategies for their continued reinvestment in the 

U.S. semiconductor industry, and the CHIPS Program 

Office will prioritize applicants that credibly commit 

to investing in R&D in the United States, such as by 

building domestic R&D fabs or other domestic R&D 

facilities.15 Conducting R&D within the United States 

will facilitate the transfer of new leading-edge process 

technologies to high-volume production and signal 

chipmakers’ intent to invest in the United States over 

the long term.

Each CHIPS-funded fab will be supported by an 

ecosystem of reliable suppliers committed to operating and innovating in the United States. The CHIPS 

Program Office encourages applicants to take steps 

to attract associated suppliers, such as by identifying plans for key suppliers to locate in the same area, 

identifying infrastructure that can benefit the applicant as well as material or manufacturing equipment 

suppliers, or incorporating these suppliers into the 

applicant’s workforce development or R&D commitments. The CHIPS Program Office will also release a 

separate funding opportunity for materials and manufacturing equipment facilities in late spring 2023.

The U.S. Department of Defense and national security community will have access to secure leadingedge logic chip manufacturing in a commercial 

production environment in the United States. The 

U.S. military is currently unable to source leading-edge 

chips from an onshore facility, leaving critical military 

systems vulnerable to supply disruptions.16 Producing 

secure chips in the United States is thus a strategic 

priority. 

Advanced Packaging

Assembly, test, and packaging (ATP) are the final 

steps of semiconductor production. These steps are 

generally performed in specialized facilities and have 

been historically labor intensive.17 Today, most packaging capacity resides in East and Southeast Asia, where 

ATP facilities can be located near the companies 

performing electronic assembly.18 The United States 

currently has limited ATP capacity.19 This shortfall 

represents a strategic vulnerability, as bolstering frontend fabrication capacity without investing in packaging will limit supply-chain resiliency.

The industry distinguishes between two categories of 

packaging: conventional and advanced. Although the 

United States must on-shore some conventional packaging for national security purposes, it will generally 

be difficult to build economically competitive conventional packaging facilities in the United States. For 

conventional packaging, the CHIPS Program Office, 

in coordination with other departments and agencies, 

will support ongoing work with allies and partners, 

including countries in the Americas and those participating in the Indo-Pacific Economic Framework for 

Prosperity, to ensure the adequacy of global capacity 

and guarantee supply outside countries of concern.20

At the same time, the CHIPS Program Office will invest 

in projects that support U.S. leadership in advanced 

packaging—a subset of packaging technologies that 

uses novel techniques and materials to increase the 

performance, power, modularity, and/or durability of 

an integrated circuit. Chipmakers increasingly view 

progress in advanced packaging as critical to remaining at the leading edge of logic and memory chip 

production. Indeed, advanced packaging is poised 

to play a major role in the development of chips for 

artificial intelligence, cloud computing, and medical applications, among many other next-generation 

technologies.21

The CHIPS Program Office has therefore set the following objectives for advanced packaging:

By the end of the decade, the United States will be 

home to multiple high-volume advanced packaging 

facilities. Consistent with the importance of advanced 

packaging to leading-edge logic and memory 
CHIPSfor AMERICA 

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CROSS-CUTTING THEMES

Elaborating on the CHIPS Act implementation priorities identified in Executive Order 14080, the CHIPS 

Program Office has identified nine themes that will be critical to success across each category highlighted in this report. Alongside the Notice of Funding Opportunity for Commercial Fabrication Facilities, 

the CHIPS Program Office will release fact sheets and other materials on https://www.chips.gov expanding on the themes listed below. 

1. Catalyzing private investment. The CHIPS Program Office aims to support a virtuous cycle of private 

investment in large-scale U.S.-based production and R&D, as well as throughout the supply chain, 

attracting both existing and new private investors to the U.S. semiconductor ecosystem and encouraging innovative approaches to funding industry growth. This will help ensure that semiconductor 

firms and their investors continue to invest in the United States long after CHIPS funding has ended. 

In addition, the first funding opportunity requires applicants to demonstrate how the requested funding will incentivize them to make investments in facilities and equipment in the United States that 

would not occur in the absence of the incentives. 

2. Encouraging customer demand. As part of ensuring a project’s overall financial feasibility, applicants 

for CHIPS funding will be encouraged to secure purchase commitments across the supply chain to 

clarify future demand and mitigate the risk of future chip shortages or oversupply. In addition, the 

CHIPS Program Office will encourage customers to increase the resiliency of their supply chains by 

increasing demand for U.S.-produced chips. The CHIPS Program Office urges customers to think 

creatively about how they can make purchase commitments or take other actions to support semiconductor manufacturing in the United States.

3. Engaging with U.S. partners and allies. While the CHIPS Program Office aims to build domestic 

manufacturing capacity to advance U.S. economic and national security, the United States does 

not seek to become self-sufficient in semiconductor manufacturing. Alongside other agencies, 

the Department of Commerce will engage with U.S. allies and partners to coordinate government 

incentive programs, build resilient cross-border semiconductor supply chains, promote knowledge 

exchange and collaboration in developing next-generation technologies, and implement safeguards 

to protect national security. 

4. Building a skilled and diverse workforce. The CHIPS Program Office expects applicants and their 

partners to develop strategies to recruit, train, and retain a diverse and skilled set of workers to fill 

the good jobs created by the CHIPS Act. The CHIPS Program Office will work with applicants and 

their partners to deploy best practices from within and outside the semiconductor industry to help 

scale evidence-informed models and partnerships to meet workforce demands. Applicants will be 

required to detail their engagement with workforce partners—such as educational institutions, labor 

unions, workforce development organizations, and career and technical education programs—in 

formulating their workforce plans. Sectoral partnerships will play an integral role in the development 

and implementation of high-quality, equitable workforce development strategies. Moreover, to create 

a self-sustaining domestic semiconductor ecosystem the United States must train the next generation of scientists, engineers, and technicians.

5. Reducing time-to-build. To create and maintain competitive advantage, the United States needs to 

be able to build semiconductor manufacturing facilities much more rapidly. This will require efficient 
CHIPSfor AMERICA

8

and transparent permitting processes. The CHIPS Program Office intends to prioritize applications 

that demonstrate a clear path to meeting permitting requirements in a timely manner, such as by 

securing agreements from state and local permitting authorities to ensure projects stay on schedule 

while remaining safe, environmentally friendly, and otherwise compliant with relevant laws. 

6. Reducing costs through innovation. To sustain a vibrant U.S. semiconductor ecosystem over the 

long term, companies will need to innovate to reduce operating costs and increase net productivity. Companies should focus on (1) reducing the unit cost of new capacity, including by investing in 

next-generation manufacturing processes and developing more modular, upgradeable, and effective 

tools; (2) leveraging existing capacity to streamline fab operations, such as by utilizing new technologies to improve demand forecasting, production planning, yield, and tool uptime; and (3) enhancing 

value for customers, including by making use of advanced packaging, chiplet-based products, and 

new materials and substrates with unique performance properties. Such innovation will require close 

collaboration with other market participants, including customers and companies specializing in construction, software, equipment, and materials.

7. Promoting operational security, supply chain security, and cybersecurity. The CHIPS Program 

Office will assess applications based on the quality of an applicant’s strategy for mitigating key risks 

to operational security, supply chain security, and cybersecurity. This assessment will consider the 

likelihood that the applicant will protect semiconductor production and use for national security 

purposes from insider threats and external interference, if applicable; the likelihood that the applicant 

can effectively establish the security of intellectual property and government assets; the comprehensiveness and maturity of the applicant’s cybersecurity and cyber-supply chain risk management 

plans and activities; and the extent to which the applicant has identified and mitigated any risks or 

vulnerabilities associated with dependence on foreign-owned or sourced inputs, equipment, facilities, 

personnel, or subsequent manufacturing steps.

8. Spurring regional economic development and inclusive economic growth. The CHIPS Program 

Office is committed to building strong communities that participate in the prosperity of the semiconductor industry, as well as ensuring that taxpayer investments maximize benefits for the U.S. 

economy. In particular, the CHIPS Program Office will assess applicants’ commitments to future 

investment in the U.S. semiconductor industry; their support for CHIPS R&D programs; their efforts 

to create inclusive opportunities for businesses; their commitments to climate and environmental responsibility; and their commitments to community investments, such as financing or building 

affordable housing, financially supporting research institutes, investing in K-12 schools and community colleges, and aligning their efforts with other federal programs. 

9. Enforcing guardrails. The CHIPS Act allows the Department of Commerce to recover the full amount 

of an award if an applicant knowingly engages in any joint research or technology licensing effort 

with a foreign entity of concern that relates to a technology or product that raises national security 

concerns. In addition, the CHIPS Act requires awardees to enter into an agreement to refrain from 

engaging in any significant transaction involving the material expansion of semiconductor manufacturing capacity in countries of concern for ten years after receiving funding. Further, awardees 

cannot spend CHIPS dollars on stock buybacks or dividends, and the CHIPS Program Office will give 

preference to applicants that commit to making long-term investments in the United States. The 

CHIPS Program Office will monitor award recipients to ensure compliance with award terms and protection of taxpayer resources and take enforcement steps as necessary. 
CHIPSfor AMERICA 

9

manufacturing, the CHIPS Program Office encourages 

applicants to invest in advanced packaging in addition to wafer fabrication. The CHIPS Program Office 

welcomes applications from both outsourced assembly and test firms, as well as from integrated device 

manufacturers and foundries that have in-house 

advanced packaging capabilities.

The United States will be a global technology leader 

in commercial-scale advanced packaging for both 

logic and memory chips. The CHIPS R&D Office 

has established the National Advanced Packaging 

Manufacturing Program, which will leverage some of 

its funding to generate rapid advances in advanced 

packaging over the coming decade, accelerating progress in strategic industries such as artificial 

intelligence, cloud computing, and next-generation 

telecommunications. The CHIPS Program Office aims 

to build on this progress by ensuring that the latest 

advanced packaging technologies are brought to 

commercial scale here in the United States. 

Semiconductors produced by CHIPS-funded fabs will 

have multiple options for packaging services, including from both U.S.-based facilities and other facilities 

in diverse locations outside countries of concern.

In addition, the United States and its allies and partners will be substantially less reliant on countries of 

concern for conventional packaging. In conjunction 

with the Department of State, the Department of 

Commerce will engage with U.S. allies and partners to 

help them attract investments in conventional packaging facilities. For applicants seeking funding for frontend fabrication facilities, the CHIPS Program Office 

will consider the national security risks of the location 

of any upstream and downstream steps in the manufacturing process. 

Leading-Edge Memory

Memory chips are a critical component of all computational systems, ranging from supercomputers to 

smartphones, and account for a significant portion of 

the overall global semiconductor market.22 Although 

the United States was once a leader in memory production, cost competition and market consolidation 

led most U.S. companies to exit the memory business 

in the 1980s and 1990s.23 Most manufacturing—even 

by fabs operated by U.S.-based firms—now takes 

place in East Asia.24 Investments in U.S. leading-edge 

memory production will therefore advance American 

technology leadership and geographically diversify 

global supply.

Unlike logic chips, memory products are standardized 

and often interoperable: A memory chip from one 

company can typically substitute for a memory chip 

from another.25 These features generally increase the 

resiliency of the memory market, as memory customers willing to pay the prevailing market price can often 

source their products from any memory producer in 

the market. Memory chipmakers must thus compete 

largely on price and operate at lower margins relative to logic chipmakers.26 U.S. memory producers 

will therefore need to reach sufficient scale to benefit 

from the economies of scale enjoyed by larger clusters 

in East Asia. 

The CHIPS Program Office has set the following 

objectives for memory chips:

By the end of the decade, U.S.-based fabs will 

produce high-volume leading-edge dynamic random-access memory (DRAM) chips on economically competitive terms. The CHIPS Program Office 

welcomes applications from memory companies 

to build advanced memory capacity in the United 

States, especially those that identify innovative ways 

to drive down the costs of U.S.-based production. 

Applicants for funding should demonstrate that their 

U.S. memory facilities will be economically competitive and sustained through continuous upgrades after 

the conclusion of the CHIPS Incentives Program, and 

the CHIPS Program Office encourages applicants to 

explore innovative ways of driving down costs in the 

long term.

R&D for next-generation memory technologies critical to supercomputing and other applications will 

be conducted in the United States. DRAM will be key 

to supercomputing and other advanced technologies. 

Moreover, with innovations in advanced packaging, 

memory and logic technologies will work together 

to enable advanced computing, and eventually both 

logic and memory functions will be more deeply integrated on a single or co-packaged chip.

Current-Generation and Mature-Node 

Semiconductors

A resilient supply of current-generation and maturenode chips is critical to U.S. economic and national 

security. These chips are in a wide range of modern 
CHIPSfor AMERICA

10

technologies, including automobiles, aerospace and 

defense systems, medical devices, and critical infrastructure. But over the past several years, the COVID19 pandemic and associated economic impacts have 

exposed the underlying fragility of these supply chains. 

Between 2020 and 2021, demand skyrocketed for 

semiconductors related to computing, communications, and consumer and industrial goods.27 When the 

industry struggled to ramp up supply, the resulting 

shortages exacerbated ongoing supply-demand imbalances and contributed to delays in the production of 

a range of goods, including automobiles and medical 

equipment.

While COVID-19 was unprecedented, it revealed structural problems with semiconductor supply-chain management that will endure unless actively addressed. 

Firms both upstream and downstream of chipmakers 

typically have limited visibility into their supply chains, 

often having knowledge of only their immediate customers and suppliers. Purchasing often involves the 

use of third-party distributors and short-term purchase 

contracts. These features make it difficult for companies to assess supply chain risks and to diagnose and 

address shortages as they arise. In addition, currentgeneration and mature-node production is geographically concentrated, with East Asia accounting for the 

majority of global capacity in the legacy space and the 

Chinese government actively subsidizing additional 

investment in legacy production.28

Such challenges are further compounded by the 

limited interoperability of chips manufactured by different suppliers or made to different specifications.29

If one chipmaker has an unexpected shortage, others 

struggle to fill the gap. These issues are particularly 

pronounced for the long tail of legacy chips used in 

the defense industrial base.30

With these challenges in mind, the CHIPS Program 

Office will invest in current-generation and mature production consistent with the following objectives.31

By the end of the decade, the United States will have 

increased its production for the current-generation 

and mature-node chips most vital to U.S. economic 

and national security. This includes, for example, certain semiconductors used in automobiles, aerospace 

and defense, medical devices, or other U.S critical 

infrastructure sectors. The CHIPS Program Office 

believes that developing new capacity across a range 

of current-generation and mature nodes can advance 

U.S. economic and national security, and applicants 

seeking funding for projects at specific nodes will 

be asked to make the case for how their proposed 

approach would advance this objective. In addition, 

the CHIPS Program Office encourages applicants to 

explore innovative ways of driving down costs in the 

long term. It also plans to engage semiconductor customers, including fabless firms and original equipment 

manufacturers, to increase demand for U.S.-origin 

chips and improve the resiliency of their own supply.

The United States will increase production of and 

maintain technology leadership in compound semiconductors and other specialty chips. Innovation 

in semiconductor manufacturing is not confined to 

reducing the size of the features on logic and memory 

chips. For example, semiconductors made from compound materials such as Silicon Carbide or Gallium 

Nitride will be increasingly central to defense applications, electric vehicles, and next-generation communications infrastructure. Specialty process technologies 

such as Fully Depleted Silicon-On-Insulator are also 

critical for defense applications, and specialty chips 

will be key inputs to emerging technologies such as 

quantum information systems. The CHIPS Program 

Office does not seek to displace the private capital 

that is already being invested into these technologies 

but encourages applications for CHIPS funding where 

appropriate.

The United States will coordinate with allies and 

partners to ensure resilient production of and access 

to current-generation and mature-node chips. The 

United States does not seek to become self-sufficient 

in chip manufacturing and expects that U.S. allies and 

partners will also increase their chip production to 

reduce the global concentration of current-generation 

and mature-node chips. International coordination will 

help mitigate the risk of overproduction and fill known 

gaps in the allied and partner ecosystem.

Chipmakers will be able to respond more nimbly to 

supply and demand shocks. If a given chipmaker cannot meet customer demand, other chipmakers should 

be positioned to fill the gap without months- or yearslong delays. In evaluating proposals for current-generation and mature-node facilities, the CHIPS Program 

Office will consider the extent to which the proposed 

manufacturing processes can easily be converted to 

produce different types of semiconductors in times of 

disruption.
CHIPSfor AMERICA 

11

CONCLUSION

The CHIPS Program Office is embarking on a oncein-a-generation investment in American industry. 

This document presents a vision for success for 

investments in the front- and back-end fabrication of 

leading-edge, current-generation, and mature-node 

semiconductors. It will guide how the Department of 

Commerce approaches implementation, with an eye 

toward advancing U.S. economic and national security, 

enhancing global supply chain resilience, and cementing U.S. leadership in designing and building the technologies that will define our future.

SUPPLY CHAINS AND R&D FACILITIES

The CHIPS Program Office will release two additional funding opportunities in the coming months: one for 

materials and equipment facilities in late spring 2023, and one for R&D facilities in the fall. Although suppliers and R&D facilities are not yet eligible for funding, encouraging the development of supply chain and 

R&D ecosystems is nonetheless an important focus of the first funding opportunity. 

Supply Chains. The CHIPS Program Office recognizes the benefits of collaboration between the fabrication facilities that are eligible under the first funding opportunity and the material or manufacturing equipment facilities that will be eligible under the funding opportunity to be released in the spring. The CHIPS 

Program Office encourages applicants for the first round of funding to take steps to attract suppliers, 

thereby creating a more productive, efficient, and self-sustaining semiconductor ecosystem. Fabrication 

facilities could, for example, identify plans for key suppliers to locate in the same area, identify mutually 

beneficial infrastructure, or incorporate suppliers into workforce development and R&D commitments.

R&D. The CHIPS Program Office will prioritize applicants in this first round of funding who credibly commit to investing in R&D in the United States, such as by building domestic R&D fabs or other domestic 

R&D facilities. In addition, each applicant will be asked to participate in the National Semiconductor 

Technology Center (NSTC), which will conduct research and prototyping of advanced semiconductor 

technology; and, if applicable, to engage, support, and collaborate with projects funded by the National 

Advanced Packaging Manufacturing Program (NAPMP), which will strengthen capabilities for semiconductor advanced test, assembly, and packaging in the domestic ecosystem. Applicants will furthermore be 

asked to propose commitments to support these or other CHIPS R&D efforts, such as by rotating project 

technical staff to the NSTC or NAPMP or by making mature-node process design kits available under an 

open-source license to further strengthen the domestic electronic design automation industry and improve 

foundry interoperability.

Beyond these efforts by the CHIPS Program Office, the CHIPS Research and Development Office is 

also responsible for administering $11 billion in CHIPS funding to support R&D and infrastructure investments, including in the NSTC and NAPMP and not more than three new Manufacturing USA Institutes 

focused on semiconductor manufacturing. The CHIPS Research and Development Office will soon 

release a strategy for its implementation of the NSTC. The CHIPS Act also establishes the Department of 

Defense Microelectronics Commons, which will enable domestic lab-to-fab transition of microelectronics 

innovations.
CHIPSfor AMERICA

12

ENDNOTES

1 See CHIPS Act of 2022, Pub. L. No. 117-167, Div. A, § 102, 136 Stat. 

1372 (2022) (“CHIPS Act of 2022”).

2 Pub. L. No. 116-283, tit. XCIX, § 9902 (2021) (codified at 15 

U.S.C. § 4652). The Department of Commerce is also responsible for 

administering $11 billion for research and development pursuant to 

Section 9906, including for the National Semiconductor Technology 

Center, the National Advanced Packaging Manufacturing Program, 

NIST metrology research, and not more than three Manufacturing USA 

Institutes focused on semiconductors. 15 U.S.C. § 4656. Section 9906 

funding will be administered by the CHIPS Research and Development 

Office. The CHIPS Act of 2022 also provides $2 billion for the CHIPS 

for America Defense Fund, administered by the U.S. Department 

of Defense; $500 million for the CHIPS for America International 

Technology Security and Innovation Fund, administered by the U.S. 

Department of State; and $200 million for the CHIPS for America 

Workforce and Education Fund, administered by the National Science 

Foundation. See CHIPS Act of 2022, § 102(b), (c), (d).

3 This strategy will be released by the CHIPS Research and 

Development Office within the National Institute of Standards and 

Technology.

4 Semiconductor Industry Association and Oxford Economics, 

“Chipping In: The Positive Impact of the Semiconductor Industry on 

the American Workforce and How Federal Incentives Will Increase 

Domestic Jobs,” May 2021, 4, 6.

5 See Chris Miller, Chip War (New York: Scribner, 2022), 3-32. 

6 Miller, Chip War, 19-22, 29-31.

7 The White House, “Building Resilient Supply Chains, Revitalizing 

American Manufacturing, and Fostering Broad-Based Growth: 100-

Day Reviews under Executive Order 14017,” June 2021, 9, https://www.

whitehouse.gov/wp-content/uploads/2021/06/100-day-supply-chainreview-report.pdf.

8 White House, “Building Resilient Supply Chains,” 38-39; Brian 

Shirley, “Don’t Forget About Memory,” Potomac Institute for Policy 

Studies, July 2022, 2.

9 See, e.g., Dylan Walsh, “How auto companies are adapting to 

the global chip shortage,” Massachusetts Institute of Technology, 

June 2022, https://mitsloan.mit.edu/ideas-made-to-matter/how-autocompanies-are-adapting-to-global-chip-shortage; “Medical Device 

Shortages During the COVID-19 Public Health Emergency,” U.S. Food 

and Drug Administration, last modified December 2022, https://www.

fda.gov/medical-devices/coronavirus-covid-19-and-medical-devices/

medical-device-shortages-during-covid-19-public-health-emergency.

10 The White House, “Building Resilient Supply Chains,” 21-80.

11 U.S. Department of Commerce, “Results from 

Semiconductor Supply Chain Request for Information,” January 

2022, https://www.commerce.gov/news/blog/2022/01/

results-semiconductor-supply-chain-request-information.

12 U.S. Department of Commerce, “A Strategy for the CHIPS 

for America Fund,” September 2022, https://www.nist.gov/system/

files/documents/2022/09/13/CHIPS-for-America-Strategy%20

%28Sept%206%2C%202022%29.pdf.

13 White House, “Building Resilient Supply Chains,” 38-39. Industry 

participants also noted the shift in production to East Asia in comments submitted in response to the Department of Commerce’s 

Request for Information (RFI) on the semiconductor supply chain. 

See, e.g., DOC-2022-0001-0171 (citing U.S. Department of Defense 

report referencing “[t]he migration of semiconductor manufacturing 

to the Asia-Pacific region”).

14 The majority of the top 10 fabless semiconductor design firms, 

by revenue, are headquartered in the United States. See Congressional 

Research Service, “Semiconductors: U.S. Industry, Global Competition, 

and Federal Policy,” October 2020, 12.

15 The CHIPS Program Office will also be releasing a Notice of 

Funding Opportunity for R&D facilities in fall 2023

16 White House, “Building Resilient Supply Chains,” 56 (“With no 

leading-edge semiconductor manufacturers in the United States . . 

. the DoD is currently unable to ensure its access to secure supply 

chains.”).

17 Congressional Research Service, “Semiconductors: U.S. Industry, 

Global Competition, and Federal Policy,” 

18 Of the more than 500 assembly and test facilities tracked by 

SEMI, more than 210 outsourced semiconductor assembly and test 

facilities are in China and Taiwan, while only approximately 45 are in 

the Americas. In addition, more than 50 integrated device manufacturer packaging facilities are in Southeast Asia, and around 25 are 

in China. See SEMI, “Worldwide Assembly & Test Facility Database,” 

2022.

19 John VerWey, “Betting the House: Leveraging the CHIPS and 

Science Act to Increase U.S. Microelectronics Supply Chain Resilience,” 

Center for Security and Emerging Technology, January 2023, 13 (“U.S.-

based ATP capacity is roughly 3 percent of total global capacity, and 

no U.S. firms lead in the supply of packaging materials.”). See also

DOC-2022-0001-0073 (noting, in response to the Department of 

Commerce’s Request for Information, that “North America’s share of 

global packaging production is a mere 3 percent”).

20 The CHIPS Act defines “foreign country of concern” as “a 

country that is a covered nation (as defined in section 4872(b) of 

title 10 United States Code)” and “any country that the Secretary, in 

consultation with the Secretary of Defense, the Secretary of State, 

and the Director of National Intelligence, determines to be engaged in 

conduct that is detrimental to the national security or foreign policy 

of the United States.” 15 U.S.C. § 4651(7).

21 See, e.g., IEEE Electronics Packaging Society, “Heterogeneous 

Integration Roadmap,” October 2019, 5.

22 Shirley, “Don’t Forget About Memory,” 2 (“The memory industry 

accounts for $154 billion in sales in 2021, compromises 28% of the 

global $556 billion semiconductor market, and is equivalent in size to 

the entire category of logic.”). 

23 Miller, Chip War, 207; Shirley, “Don’t Forget About Memory,” 

4 (“The 1980s saw the memory market become both international 

and commoditized, with the rise of the personal computer (PC) and 

DRAM manufacturing by several well-funded Japanese companies 

driving cost competition. By the end of the decade, companies such 

as Toshiba, NEC, and Hitachi dominated the DRAM market, forcing out 

most US suppliers.”).

24 Will Hunt, “Sustaining U.S. Competitiveness in Semiconductor 

Manufacturing,” Center for Security and Emerging Technology, 

January 2022, 29-30.

25 Congressional Research Service, “Semiconductors: U.S. Industry, 

Global Competition, and Federal Policy,” 9 (noting that “memory chips 

are considered commodities with little differentiation among them”).

26 Id. (noting that memory chips “typically [operate] with smaller 

profit margins than microprocessors”).

27 Semiconductor Industry Association, “Global Semiconductor 

Sales Increase 24% Year-to-Year in October; Annual Sales Projected 

to Increase 26% in 2021, Exceed $600 Billion in 2022,” December 2021.

28 Hunt, “Sustaining U.S. Competitiveness,” 2; U.S. Department of 

Commerce, “A Strategy for the CHIPS for America Fund,” 7.

29 World Economic Forum, “When the chips are down: How 

the semiconductor industry is dealing with a worldwide shortage,” 

February 2022 (noting that “[s]witching to a different manufacturer 

typically adds [a] year or more because the chip’s design requires 

alterations to match the specific manufacturing processes of the new 

partner”).

30 Sujai Shivakumar and Charles Wessner, “Semiconductors 

and National Defense: What are the Stakes?” Center for Strategic 

and International Studies, June 2022, https://www.csis.org/analysis/

semiconductors-and-national-defense-what-are-stakes.

31 Of the $39 billion appropriated for section 9902 of the CHIPS 

Act, $2 billion is set aside for equipment and fabrication facilities used 

to produce semiconductors at mature technology nodes. See CHIPS 

Act of 2022, § 102(a)(3). The CHIPS Program Office views this number 

as a floor, not a ceiling. 

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