Commerce Department Plans $874 Million for Seven Semiconductor R&D Projects

The US Department of Commerce plans to provide up to $874 million in CHIPS and Science Act incentives to seven semiconductor companies developing technologies for AI infrastructure, extending the government’s support for domestic semiconductor research and the US compute supply chain.

The funding, announced through letters of intent, still requires additional review before final awards are issued. As part of each agreement, the federal government would receive a minority, non-controlling equity stake in the recipient companies.

The projects span several areas of semiconductor research, including photonics, memory, advanced packaging, materials and technologies designed to improve the performance and security of AI computing systems.

“This $874 million round tackles the connective tissue of AI compute,” Brendan Burke, Research Director at The Futurum Group, told Techstrongsemi. “GlobalFoundries with co-packaged optics, Multibeam with multi-chip assembly, Thintronics with low-loss dielectrics, and Aeluma with photonic substrates all target the same physical problem.”

“As accelerators grow into hyper-large form factors that span entire reticle limits and beyond, the bottleneck shifts from the transistor to the package and the optical link,” he said. “By funding that layer domestically, the Department of Commerce is hardening the part of the stack where US design leadership is most exposed. China can subsidize fabs, but the but the packaging, photonics, and materials know-how being seeded here is what keeps next-generation system architecture anchored in the US.”

Seven Chip Companies

GlobalFoundries is slated to receive the largest award, with up to $300 million to advance co-packaged optics technology. The approach places photonic components alongside AI processors, allowing data to move using light rather than traditional electrical connections. The Commerce Department said the investment could accelerate domestic development of the technology by two to three years while improving computing speed and energy efficiency.

Kepler is expected to receive as much as $245 million to develop a new generation of AI memory built on 3D and ferroelectric technologies. Faster memory has become a critical requirement as AI models continue to grow in size and complexity.

Multibeam Corporation would receive up to $140 million to develop advanced chip packaging technology that stacks multiple semiconductor dies into a single package connected through thousands of high-speed interconnects. Advanced packaging has become one of the industry’s highest priorities as manufacturers seek better performance without relying solely on smaller manufacturing processes.

The remaining funding targets several emerging semiconductor technologies.

Extropic is in line for up to $75 million to develop thermodynamic sampling units, a computing approach designed to solve optimization, simulation and AI workloads while consuming substantially less energy than conventional processors.

Thintronics could receive up to $50 million to develop ultra-low-loss dielectric materials used in advanced semiconductor packaging and high-performance networking infrastructure.

OBSIDIA Semiconductors would receive up to $34 million to develop non-invasive systems that identify counterfeit or malicious electronic components, helping verify the provenance and traceability of parts used in secure AI supply chains.

Aeluma is expected to receive up to $30 million to develop new semiconductor substrate technology used in photodetectors and lasers for AI photonic interconnects.

Continues CHIPS Program Support

Commerce Secretary Howard Lutnick said the investments are intended to strengthen US semiconductor capabilities while supporting domestic innovation and manufacturing.

The announcement also expands the federal government’s practice of taking equity positions in companies receiving CHIPS Act funding. The equity stakes are intended to provide a return for taxpayers while remaining minority, non-controlling interests.

The announcement follows earlier decisions by the Trump administration to take equity stakes in companies receiving CHIPS-related incentives, including the government’s investment in Intel announced last year and a subsequent stake in laser technology startup xLight. Those transactions prompted criticism from some lawmakers who argued the original legislation was intended to support semiconductor manufacturing rather than give the federal government ownership positions in private companies.