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How to submit the CHIPS Act Pre-Application

Published: 05/03/2023
Updated: 04/11/2024

A guide for the CHIPS Act pre-application process and priorities

 As of May 1, the U.S. Department of Commerce (DOC) is accepting pre-applications for the first notice of funding (NOFO) for the CHIPS and Science Act, a federal bill that invests $52 billion into the national semiconductor industry.

Greater Phoenix Economic Council (GPEC) legal partners joined a webinar to advise local semiconductor and manufacturing companies on the statement of interest and pre-application submission process for the CHIPS Act. The panel included:

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

Before Submitting the Pre-Application

The Statement of Interest (SOI) is a short description of the project based on a list of questions from the DOC that gauges interest in CHIPS Act funding and a company’s fit in the application process. Submitting an SOI is the first step in initiating the application process and must be complete at least 21 days prior to submitting a pre-application or full application. Johnson said that in some cases, the DOC has held post-statement of interest meetings to provide feedback, so it is valuable to submit the statement early.

The pre-application includes several different sections explaining the scope of the project. While it is not required, it is highly encouraged, as the DOC will provide feedback to applicants in order to bolster the full application. Companies are advised to submit all the information they can, but it is recognized that not all information will be available at this time.

Panelists emphasized the importance of highlighting which of the six CHIPS Act priorities are relevant to your project. The priorities are economic and national security objectives, commercial viability, financial strength, technical feasibility and readiness, workforce development and broader impacts.

“The point is not necessarily to have every single item finalized, it’s to get as much information as possible in front of the Department so that they can give you meaningful feedback that will make your full application stronger and help with the later stages of the process,” Lawhon said.

Click here for CHIPS Act overview

Components of the CHIPS Act Pre-Application Process

1. Cover page

Input as a webform on the application folder, the cover page has a set of basic questions including project name, organization, and SAM Unique Entity ID (UEI) registration number. While the UEI is not required at this point, Lawhon advised to create an account now because it will be required later in the process. You can sign up here.

2. Project plan

This summary should include information on the estimated timeline, relevant CHIPS Act priorities, justification for why the project should receive funding, and an application profile. It will also include a webform component with sections to address expected capital expenditure and projected peak production.

This is also where the applicant will submit information about the facilities, including the number and type of facility, needed technology and expected construction and production timelines.

3. Financial information

Audited, consolidated company financials from the last three fiscal year ends and key performance metrics will need to be submitted, as will a document reviewing the organizational structure.

This should include a projected summary of expected revenues, costs and cash flows to this project with explanations on how the applicant arrived at these projections. The costs and the sources of money should be equal.

The CHIPS website provides an excel file to use as a template here. For more recommendations, watch this NIST webinar or review the webinar presentation here.

“You’re not expected to have every single item nailed down at this pre-app stage,” Lawhon said. “There will be things they’re asking for here that you do not necessarily know yet, and you can be honest about where you are in the process of figuring it out.”

4. Environmental Questionnaire

This template will help determine whether your project will meet the environmental requirements to receive funding. You are not expected to have all the information at this time, but fill it out to the best of your ability.

5. Workforce development plan

An applicant must be able to recruit, train and retain a diverse and skilled workforce. The section will address the workforce needs and strategies to meet them, education and training programs that will be offered, and actions taken to engage with strategic partners and sectoral partnerships.

Six CHIPS Act Priorities

 Funding decisions will largely be based off how applicants meet the DOC’s priorities for the CHIPS Act. Companies are encouraged to fit as many priorities as they can into their project and describe them in detail in the pre-application.

 “You should use every opportunity in your submissions to them at the pre-app phase, even at the statement of interest phase if you can, to show that you’re in line with these six priorities,” Patterson said.

1. Economic and National Security Objectives

Projects must advance the national semiconductor ecosystem and increase resilience against supply chain issues and foreign threats.

Guardrails in the CHIPS Act prevent company trade and cooperation with entities of foreign concern, which are China, Iran, North Korea and Russia. Significant transactions or expansion of semiconductor manufacturing, defined as $100,000 or more over the 10-year award period, is disallowed in those countries and may result in suspension of the monetary reward and return of disbursed funds, plus interest.

There is also prohibition on joint research or technology licensing with an entity of concern that involves products that raise national security concerns.

Galan said there is an exception of existing facilities or equipment for legacy semiconductors in these counties, along with technological updates they may require in the future.

“Semiconductor technology is moving at a very past pace, probably faster than it ever has in history, so (the DOC) expects to update this list every couple of years,” Galan said.

2. Commercial viability

The DOC will favor projects with long-term viability. The department will consider customer base and demand, the current and anticipated supply of output, the pricing model, and a supply for needed inputs.

3. Financial strength

A successful applicant will show ability to handle a massive financial responsibility. The DOC will review historical financial information, the reasonableness of planned expenditures, cash flow generation including private funding, and creditworthiness of the applying company.

It will also consider whether the project needs CHIPS funding to launch.

4. Technical feasibility and readiness

If your company or the project’s partners have done other large-scale projects, be sure to mention it in the pre-application. The DOC will consider experience and structure of the applicant as it examines whether the applicant has the ability to complete a project at this scale.

Considerations include whether the applicant has technological and manufacturing processes already in place, a construction plan or whether the process for securing construction contracts has begun, and the risk level of regulatory delays.

5. Workforce Development

Applicants are encouraged to work with higher education programs and encouraged to submit letters of support or commitment. Locally, colleges like Arizona State University, University of Arizona, Grand Canyon University, Northern Arizona University and Maricopa County Community Colleges are possible partners, as are other institutions that specialize in advanced manufacturing.

A letter from a secondary end user in a related industry such as aerospace or healthcare can also help.

“Look to fill a niche that is not here already,” Johnson said. “Ensure throughout the entire package that you’re telling a good story.”

6. Broader Impacts

Applicants must provide a letter from a state or local government entity showing that there are qualifying local incentives. Most applicants in the state will go through the Arizona Commerce Authority (ACA), which will ask for real estate information including the site location, employment estimations and capital expenditure plans.

Regardless of whether a company is applying in the first NOFO for semiconductor production facilities or if it will be in the second or third NOFO for material suppliers and equipment manufacturers or construction, partnerships will be paramount.

“These projects are going to require extensive cooperation with private and public entities to support you and those discussions should be happening now, even if you are not covered by this first NOFO,” Patterson said.