Why the CHIPS+ Act is a Big F#@!ing Deal For Breakthrough Science Startups!
Within a few short weeks, Congress passed the CHIPS and Science Act, the Inflation Reduction Act, and a host of other bills that could dramatically transform the scientific and startup ecosystem. This week, I want to take a closer look at the CHIPS bill and unpack the most important provisions that could help the United States become a leading manufacturer of semiconductors again and accelerate the commercialization of technological breakthroughs from a number of Prime Movers Lab’s portfolio companies. While by no means comprehensive (the bill is more than 1,000 pages), here are some of the highlights that could benefit breakthrough science startups:
Funds Semiconductor Incentives
The most important provision of the bill is the $52.7 billion in emergency supplemental appropriations to advance the nation’s semiconductor manufacturing capabilities. Semiconductors are essential to every computer, phone, car, and piece of electronics that we use every day. Of that funding, $39 billion will be allocated over the next five years to incentivize investment in facilities and equipment in the U.S. for semiconductor fabrication, assembly, or R&D. Up to $6 billion may be used for the cost of direct loans and loan guarantees. While the $52.7 billion in the CHIPS for America Fund has garnered the most attention, the legislation also creates a 25% tax credit for investments in semiconductor manufacturing. American companies like Intel and Halo Industries are leading an era of innovation in semiconductors, and these incentives will ensure that these critical technologies will be manufactured in the U.S.
Educates the Next Generation of High Tech Workers
A highly skilled domestic workforce is vital to the nation’s competitiveness and the success of the semiconductor industry. Unfortunately, the semiconductor industry is projected to need an additional 90,000 workers by 2025. To close this gap, the CHIPS Act authorizes $200 million for a workforce and education fund at the National Science Foundation (NSF) to grow the semiconductor workforce. The bill will also improve STEM education by establishing a National STEM Teacher Corps pilot program to recruit and retain high-quality STEM teachers.
Strengthens Supply Chains and Ensures Semiconductors Are Built in the U.S.
With the growing threat of a Chinese invasion of Taiwan (where 92% of the world’s most advanced semiconductor chips are made), the need to expand America’s fabrication capabilities has never been greater. In order to prevent these incentives from being used to offshore manufacturing jobs, the legislation prohibits the recipients of incentive funds from expanding or building new manufacturing capacity for advanced semiconductors in specific countries (e.g. China) that present a national security threat to the United States.
Invests in Quantum Computing
Quantum computing promises to solve previously intractable problems in optimization, chemistry, advanced materials, and countless other areas. Earlier this year, Prime Movers Lab invested in neutral atom quantum architecture pioneer Atom Computing so we were thrilled to see Congress authorize quantum network infrastructure R&D and $100 million to establish a Quantum User Expansion for Science and Technology program (QUEST). The program will improve access to quantum computing hardware and clouds for research and directs the NSF to conduct quantum information science education and workforce development activities that could make the U.S. a leading innovator in this burgeoning technology.
Backs Fusion Energy Research
Prime Movers Lab strongly believes in the potential for fusion energy to transform the energy sector in the next decade and provide abundant clean energy, which is why we made investments in Commonwealth Fusion Systems and Focused Energy. Thankfully, Congress believes in developing a bold vision for fusion energy much like the one that was outlined by our very own Carly Anderson and other leading experts at the White House’s fusion energy summit in March. Fusion energy research will get a much-needed boost with $50 million authorized per year through FY 2027 for R&D. The bill also firmly backs inertial fusion (Focused Energy’s approach) and establishes at least two national teams to develop conceptual designs and technology roadmaps for a pilot fusion plant.
Increases Access to National Laboratories for Startups
Startups will also get better access to federal research facilities. Congress authorized $25 million per year to create a program that will provide entrepreneurial fellows with access to national laboratories, expertise, and mentorship to commercialize research ideas. The DoE and national laboratories will provide vouchers to small businesses for R&D, demonstration projects, technology transfer, skills training, and workforce development at national laboratories.
Supports Existing Manufacturing Programs
While not new programs, the Hollings Manufacturing Extension Partnership (MEP) and the Manufacturing USA program could receive almost $3 billion to help small businesses improve their manufacturing capabilities. The bill establishes an awards program for MEP centers to provide services for workforce development, improve the resiliency of domestic supply chains, and adopt advanced technology upgrades at small and medium manufacturers. Awards could also be used to establish demonstration laboratories and to support the development of next-generation technologies for small- and medium-sized manufacturers.
Creates a National Clean Energy Incubator Program
A new program will support incubators that accelerate the commercial application of clean energy technologies by providing a physical workspace or support, such as business education and mentorship to clean energy technology startups. Awards will be limited to $4 million per state for one or more incubators, which could prove valuable for young companies not in a major tech hub.
Focuses DOE R&D on Critical Areas
A significant chunk of the authorized funding ($11.2 billion) will go to R&D of technologies in 10 key areas that are near and dear to Prime Moves Lab and many of our portfolio companies. The bill authorizes appropriations for building technologies, sustainable transportation, advanced manufacturing, industrial emissions reduction technology, advanced materials, and renewable power research, development, and demonstration within the Office of Energy Efficiency and Renewable Energy. It also authorizes appropriations for grid modernization and advanced materials R&D within the Office of Nuclear Energy, clean industrial technologies, alternative fuels, and carbon removal R&D at the Office of Fossil Energy and Carbon Management, and authorizes new funding for the Advanced Research Projects Agency — Energy (ARPA-E). The DOE will also coordinate information sharing and connect entrepreneurs and startups to a variety of programs related to clean energy technology transfer at the department.
Invests in Our National Laboratories
Our national labs have been in need of restoration and modernization for many years. To make these improvements, CHIPS authorizes $800 million in funding for deferred maintenance, critical infrastructure needs, and modernization at a number of national labs, including National Renewable Energy Laboratory, National Energy Technology Laboratory, Idaho National Laboratory, Savannah River National Laboratory, Sandia National Laboratories, Los Alamos National Laboratory, and Lawrence Livermore National Laboratory.
What’s Next?
While Congress should be commended for passing the CHIPS and Science Act, the real battle starts now as the science and startup communities work to get these programs funded at their authorized level. With the exception of the $52.7 billion in emergency appropriations, most of these initiatives are just potential. The scientific community must keep up the fight every year during the appropriations process to ensure the vision of this legislation becomes reality.
Gavin Mathis is the Communications and Government Relations Partner for venture capital firm Prime Movers Lab, which invests in breakthrough science startups that are transforming billions of lives.
Prime Movers Lab invests in breakthrough scientific startups founded by Prime Movers, the inventors who transform billions of lives. We invest in companies reinventing energy, transportation, infrastructure, manufacturing, human augmentation, and agriculture.
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