CHIPS Act Webinar: Funding for smaller-scale supply chain projects

Published: 11/08/2023
Updated: 11/07/2023

The third CHIPS Act NOFO funds materials or equipment facilities with investment under $300 million

On September 28th, the Department of Commerce (DOC) released the CHIPS and Science Act funding opportunity for smaller-scale supply chain projects and businesses. Applicants seeking to construct, expand or modernize materials or manufacturing equipment facilities with a capital investment under $300 million can apply for federal monies starting Dec. 1.

GPEC hosted a special event webinar moderated by Vice President of International Business Development Sean Fogarty to discuss this funding round. The panel consisted of:

  • Snell & Wilmer Partner Brett Johnson
  • Snell & Wilmer Associate T. Troy Galan
  • Spencer Fane Partner Mike Patterson
  • Spencer Fane Associate Heather Hughes 

The speakers emphasized two specific points:

  1. Successful applicants will have proven that their project will enhance U.S. economic and national security
  2. Applications built by consortiums will be favored

NOFO process and definitions

This notice of funding opportunity (NOFO), which runs adjacent to a similar NOFO for projects over $300 million, will accept applications over a short window of time from Dec. 1 through Feb. 1. Unlike previous NOFOs, it is only two stages:

  1. Concept plan: Describe the project, the applicant profile including headquarters location and ownership, justification of how funding will aid the project, project feasibility and readiness, availability of non-CHIPS funds, and how it will address core goals centered on U.S. economic and national security. Use no more than 15 pages.
  2. Full Application: The DOC will communicate needs and time frame directly to applicants they deem promising.

“There’s no pre-application phase,” Hughes said. “In this NOFO, there is a concept plan required to be submitted, and the department will review the concept plans and invite those most likely to receive funding to move onto the full application phase.”

Relevant materials manufacturers include chemicals, gases, raw and intermediate materials, along with other consumables. Manufacturing equipment producers are encouraged to focus on equipment integral to the manufacturing of semiconductors, including subsystems. Johnson said that despite the broad definitions, there is a narrow perspective.

“Although there might be chemical or a gas that is leading into a product, it’s going to have to leverage some of the other specific issues, most notably around national security, that will make it a more favorable application,” he said.

Selection factors

Patterson reviewed the nine selection factors that will be used to advance the most promising applicants from the concept plan to the full application and select projects that eventually win funding. Applicants are encouraged to focus on how the project will meet these needs:

  1. The mix and breadth of strategic objectives being advanced at the project or portfolio level
  2. The likelihood that the proposed project would proceed in substantially similar form without CHIPS funding
  3. The extent to which the project’s risk profile impacts the program’s overall risk profile
  4. The extent to which the project meaningfully contributes to the development and/or sustainability of a U.S. fab cluster
  5. The extent to which the submission duplicates other projects funded by a federal agency
  6. Whether the applicant is a consortium member with a strategic vision to advance economic and national security, and the project’s relevance to that vision
  7. Whether the applicant or an affiliate has previously received financial assistance in this program
  8. The extent to which awards diversify the portfolio and the geographic location of other awards receiving support
  9. Whether the consortium has maximized resources from a relevant stakeholders

Patterson also outlined the scoring criteria:

  • 40 points to the extent in which the project advances U.S. economic and national security concerns
  • 20 points for long-term commercial viability of the project
  • 15 points for providing evidence the company or consortium can successfully execute the project
  • 15 points for the availability and credibility of non-CHIPS funding sources
  • 10 points for the strength and plausibility of the project, along with evidence that the funding is necessary to complete it
U.S. economic and national security objectives

“The U.S. is concerned that we are at risk as a nation because we’ve allowed our semiconductor industry to get offshore,” Patterson said.

Applicants outside the U.S. should focus on how the project will help onshoring efforts. Those inside must show that it can translate to suppliers relocating to areas closer to the fab facilities and enhance the domestic supply chain, Galan said.

Work with government contractors or the Department of Defense should be outlined in the concept plans. Applicants that do not work with government entities are encouraged to review to find relevant opportunities. Candidates can also consider indirect customers served.

“Something that the Department of Commerce will note highly … is identifying any government points of contact to validate that this specific project you are citing as helping national security, does in fact help national security,” Galan said.

Applying as part of a consortium may help, as consortiums often include a government or government-adjacent entity.

Building a consortium

This group of partners from public, private and other areas can bolster an application by providing a wide breadth of experience and knowledge to a project. The DOC expects that a strong consortium will include:

  • At least two suppliers
  • A state or local government entity
  • This may include a quasi-governmental entity such as the Arizona Commerce Authority
  • An anchor institution such as a semiconductor fab
  • Other members such as:
    • Workforce training providers
    • Labor unions
    • Economic development corporations
    • Institutions of higher education
    • Philanthropic foundations
    • Industry organizations
    • Tech hubs
    • Other relevant entities

Even during GPEC panels focused on th NOFOs, the panelists have emphasized the importance of consortiums. Collaborating with partner organizations broadens the impact that the project can have and ensures it has several touchpoints within the community and semiconductor cluster.

Learn more about the CHIPS Act here.