CHIPS Act Webinar: Funding opportunity for semiconductor materials and manufacturing equipment facilities 

Published: 07/28/2023

Reviewing the CHIPS Act NOFO 2 application process and success criteria

In June, the U.S. Department of Commerce (DOC) released guidelines for the second notice of funding (NOFO) opportunity under the CHIPS and Science Act. This NOFO covers the construction, expansion or modernization of commercial facilities for semiconductor materials and manufacturing equipment facilities with an investment of at least $300 million.  

Companies may submit statements of interest (SOI) at any time. Pre-applications may be submitted on or after Sept. 1, and full applications will be accepted beginning Oct. 23 on a rolling basis. 

 A related opportunity for facilities with investment below $300 million is expected in late fall.  

GPEC’s latest CHIPS Act webinar featured Greater Phoenix law firms familiar with the federal act and its application process. Speakers in the webinar included: 

  • Brett Johnson, Partner, Snell & Wilmer 
  • Mike Patterson, Partner, Spencer Fane LLP 
  • T. Troy Galan, Associate, Snell & Wilmer 
  • Moderator: Sean Fogarty, Vice President of International Business Development, Greater Phoenix Economic Council 

Eligibility and application process 

While the first NOFO focuses on semiconductor facilities, the second centers on equipment, materials and supply chain.  

Patterson said specialized equipment includes such used for the manufacturing of semiconductors and subsystems, and materials used to manufacture semiconductors may include chemicals, gases, raw and intermediate materials, and other consumables. 

Qualifying companies can submit a statement of interest at any time. The SOI, which should briefly describe the proposed project, is open for all funding rounds. As of the beginning of July, only 300 total statements of interest had been filed with the DOC, according to Patterson. 

 The pre-application is optional but highly encouraged, as the DOC will provide feedback on each submission, which will be useful in crafting a successful application package. Using these remarks from the department, one can build the full application, which will include more detailed information about the applicant and project.  

One key to crafting a successful application is to focus on how the project will address the CHIPS Act objectives, which include strengthening supply chain resilience, improving national security and bolstering the workforce. 

 “There was a feel that the U.S. had fallen behind and that we had lost a lot of the strength of the semiconductor agency,” Patterson said. “We wanted to provide a supply of secure semiconductors here for national security.” 

 In addition, Patterson emphasized that it is important to show that your project cannot happen without funding from the CHIPS Act. 

Reviewing the “Vision for Success” 

The vision for success outlines strategic objectives and soft requirements, which applicants may want to highlight but are not mandatory. There are different guidelines for domestic and foreign companies. 

Companies seeking expansion into the United States should focus on gaps in the supply chain and areas in which they can provide a service or product not currently accessible in the market. Applicants who can demonstrate their ability to advance the innovation ecosystem will be favored. 

 “They are looking for first-timers — people and applicants who do not have a facility already in the United States,” Galan said. “If you are a foreign applicant that already has a presence in the U.S., you are more likely to fall under the domestic category.” 

Domestic suppliers should be looking to support or expand a facility that already exists. The DOC will favor applications with partnerships.  

 “They want to see collaboration between suppliers and chipmakers,” Galan said. “That is something that they will be very likely and very eager to provide funding for — to create these symbiotic relationships between supplier applicants and chipmakers.” 

 Foreign companies may bring employees from their native country but are expected to recruit and hire U.S.-based employees as well. 

How local government and leadership can help 

Local governments and related organizations that want federal funding to enter their region have avenues to gain an edge, Johnson said. 

These organizations should facilitate the creation of industry clusters, whether through formal commitment or natural, organic growth.  

Building incentive packages to benefit a wide set of companies — not just one specific firm — can also play a role in building the ecosystem. In Arizona, for instance, the Qualified Facilities Refundable Tax Credit offers refundable income tax credit based on qualifying investment and number of employees. Localities can offer streamlined permitting to ensure companies receiving funding can reach operational status quicker.  

Access to infrastructure is also pivotal to a CHIPS Act project. With commitment to providing accessible buildings, electricity and water, a community can help companies receive federal funding.  

Finally, the dedication to building a strong and diverse workforce is crucial to the invigoration of an economy, even outside the scope of these projects.  

Much of the work will require partnerships between industry and state or local government. The chance of application success will be heightened if a company is working with related firms, educational institutions, government or private-public partnerships, or a combination.  

The pre-application open period is not until September, but Johnson encouraged taking first steps as soon as possible.

“A lot of people are waiting for other people to start the process,” Johnson said. “Regardless of where you are in that supply chain … starting that conversation and being the first one out I think are going to put you in a better position. Just because you’re not the manufacturer but you service the industry, I think it’s important for somebody to take the step forward on this.” 

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