U.S. Commerce Department to Terminate Funding for CHIPS Act-Funded Digital Twin Center
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the head of a U.S. CHIPS and Science Act-funded center devoted to digital twins for chip manufacturing has informed its 121 members that the U.S. Department of Commerce will terminate its US $285-million five-year contract.
According to its website, the SMART USA Institute has the goal of uniting academic and industrial labs to create “virtual manufacturing replicas” that reduce development and manufacturing costs by more than 35 percent, cut manufacturing development time by 30 percent, and improve manufacturing yields by 40 percent. It also aimed to train 110,000 workers over five years. This is the second CHIPS Act related institution to be defunded by the federal government since the second Trump governance began in January 2025.
RELATED: Trump Seeks to Cancel CHIPS Act R&D Organization’s Funds
SMART stands for “semiconductor manufacturing and advanced research with twins”,and the organization began life when it won a government contract in January 2025. It has a complicated structure. The organization is headquartered in Raleigh, N.C., and it is part of a network of federally-sponsored manufacturing innovation institutes called Manufacturing USA which predates the CHIPS Act. SMART is a public-private partnership operated by SRC Manufacturing Consortium Corporation, which is a wholly owned subsidiary of the Semiconductor Research Corporation (SRC). Established in 1982, and backed by the semiconductor industry SRC funds R&D at universities and has sponsored more than 15,000 students.
According to an email dated 12 December,sent to SMART USA participants,and obtained by IEEE Spectrum,Commerce notified the organization of the termination on 10 December. The funds were withdrawn “for convenience,” an option that allows the government to unilaterally withdraw from an agreement that is written into many federal contracts, the email states. Requests for comment from the Commerce Department were not returned by press time.
“Although DOC acknowledged that we built an effective organization and met all performance targets, the administration has chosen not to support R&D and workforce development in this direction,” Todd Younkin, SMART USA’s executive director and the CEO of SRC, wrote in the email.
What Comes Next?
Details of what happens next are still coming, but Younkin wrote that the organization would hold a Q&A webinars on Wednesday 17 December to answer member questions.
“While this is a setback, it doesn’t diminish the importance of the work or the strength of our shared com
Concerns Raised Over NIST’s Implementation of the CHIPS Act, Shifting Focus to Venture Capital Model
Recent criticism has emerged regarding the National Institute of Standards and Technology’s (NIST) approach to distributing research and development (R&D) funding allocated by the CHIPS and Science Act. Industry representatives are expressing concerns that NIST is deviating from the Act’s intent by adopting a venture capital-style funding model that prioritizes intellectual property acquisition and equity stakes over broader industry collaboration and foundational research.This shift, they argue, risks damaging NIST’s long-standing reputation as a neutral partner and ultimately hindering the goals of bolstering domestic semiconductor manufacturing and innovation.
Background: The CHIPS act and NIST’s Role
The CHIPS and Science Act of 2022, a landmark piece of legislation, aims to revitalize the U.S. semiconductor industry through considerable investments in research, development, and manufacturing. NIST, an agency within the Department of Commerce, is tasked with implementing key aspects of the Act, particularly the R&D funding programs. Traditionally, NIST has been recognized for its role as an impartial research institution and standards body, fostering collaboration between industry, academia, and government.
Criticism of NIST’s Recent Funding Approach
The concerns stem from NIST’s solicitation of R&D proposals following the closure of Natcast, a company specializing in advanced packaging. A letter from industry stakeholders, reported by IEEE Spectrum, alleges that NIST is moving away from its conventional role and increasingly behaving like a venture capital fund.
Specifically,the critics argue:
* Breach of Trust: NIST’s cancellation of obligations following the Natcast situation has raised questions about its reliability as a partner. The letter states that few companies would willingly collaborate with an organization perceived as possibly reneging on commitments.
* Shift to Venture Capital model: The September R&D solicitation appears to prioritize funding riskier research projects in exchange for intellectual property rights and equity. This approach, while common in the private sector, is seen as misaligned with the CHIPS Act’s objectives.
* Conflict with CHIPS act Intent: Industry representatives believe that dedicating the entire CHIPS R&D program to a venture capital model would fail to meet the Act’s stated goals of strengthening the entire semiconductor ecosystem, not just funding potentially high-growth startups.
Implications for the Semiconductor Industry
The shift in NIST’s approach could have several negative consequences:
* Reduced Collaboration: A focus on intellectual property acquisition may discourage companies from participating in collaborative research projects, hindering the development of shared standards and foundational technologies.
* Limited Access to Funding: Smaller companies and academic institutions, which may not be able to offer notable equity stakes, could be disadvantaged in the funding process.
* Narrowed Research Focus: Prioritizing high-risk, high-reward projects could lead to a neglect of essential research areas that are crucial for long-term industry growth but may not offer immediate commercial returns.
NIST’s Response and Future Outlook
As of November 21, 2023, NIST has not publicly addressed the specific criticisms outlined in the industry letter. However, the agency maintains its commitment to implementing the CHIPS Act effectively and fostering a robust domestic semiconductor industry.
The coming months will be critical in determining whether NIST adjusts its approach to address the concerns raised by industry stakeholders. The success of the CHIPS Act hinges on NIST’s ability to maintain its reputation as a trusted partner and to allocate R&D funding in a manner that supports the long-term health and competitiveness of the U.S. semiconductor ecosystem.
Key Takeaways:
* Industry leaders are concerned NIST is shifting from a neutral research partner to a venture capital-style investor.
* The criticism centers on NIST’s R&D funding solicitation following the Natcast closure.
* Stakeholders fear this approach undermines the intent of the CHIPS Act and could hinder broader industry collaboration.
* NIST’s response and any potential adjustments to its funding strategy will be crucial for the success of the CHIPS act.