The Department of Commerce recently released a new funding opportunity to support semiconductor-related research and development using funds appropriated under the CHIPS Act of 2022 (Pub. L. No. 117-167, 136 Stat. 1366 (Aug. 9, 2022)).  Set forth below are a few key considerations that interested applicants should bear in mind when evaluating this opportunity, including that the Department may expect to receive upside (e.g., equity stakes) in selected projects.

Background.  The CHIPS Act appropriated $11 billion for advanced microelectronics research and development programs to advance U.S. leadership in semiconductor technology, with much of that funding dedicated to standing up a National Semiconductor Technology Center (“NSTC”) to act as a center for semiconductor R&D.  Under the prior administration, the Department selected Natcast — a dedicated non-profit entity — to operate the NSTC.  In August 2025, however, the Department announced that it was removing Natcast as operator of the NSTC and rescinding $7.4 billion in CHIPS R&D funds previously awarded to Natcast.  Shortly thereafter, the Department further clarified that, moving forward, it would administer CHIPS R&D funds directly.

On September 24, 2025, the Department’s CHIPS Research and Development Office (“CRDO”) released Broad Agency Announcement No. 2025-NIST-CHIPS-CRDO-01 (the “BAA”), soliciting proposals from eligible applicants for research, prototyping, and commercial solutions that advance microelectronics technology in the United States.  Key aspects of the BAA are set forth below. 

Anticipate that the Department might expect a return on its investment.  In a departure from previously-established CHIPS Act programs, applicants may be required to provide the Department with equity, warrants, licenses to intellectual property, royalties, revenue sharing, or other such instruments.  This is consistent with a trend we have observed in other federal funding programs, where the Government is moving from the traditional “Government-as-grantor” model to a “Government-as-partner” model, particularly where projects align with the administration’s emphasis on domestic production.  For example, in recent months the Government announced equity stake investments in companies carrying out federally-funded projects for domestic production of items ranging from semiconductors to critical minerals.

Research topic areas emphasize advanced applications including AI, quantum technology, and biotechnology.  The BAA sets forth a few substantive topics areas that have been identified as “priority areas” for proposals, including semiconductors (e.g., next-gen lithography and materials, devices, advanced packaging, design, and domestic manufacturing), as well as projects that apply semiconductor R&D to AI, quantum technology, and biotechnology / biomanufacturing.  Other such topic areas include commercialization and standards development.

Projects undergo a multi-stage review process emphasizing national and economic security.  Interested applicants should, as a first step, submit a short white paper to the Department that describes the scope of their project.  If the Department determines that a project has sufficient scientific and technical merit and supports national and economic security, the applicant will be invited to submit a “Pre-negotiation Package” (essentially, a full proposal), which will again be reviewed according to multiple evaluation criteria, with priority given to projects that contribute to national and economic security.

Terms and conditions.  The Department anticipates issuing awards in the form of Other Transaction Agreements (“OTAs”), which are not subject to the standard terms that apply to federal procurement contracts, cooperative agreements, or grants.  However, the Department published a list of Administrative and National Policy Requirements that apply to awards issued under the BAA, including:

  • CHIPS Act domestic production requirements to ensure innovations developed using CHIPS funds are produced in the United States to the extent possible. 
  • CHIPS Act domestic control requirements that restrict applicants’ ability to sell or transfer IP developed using CHIPS funds, including a ban on selling or transferring IP to foreign adversaries. 
  • Investment and research security requirements to protect CHIPS-funded research from foreign entities of concern and foreign adversaries.
  • Other federal requirements that are typically included in federal financial assistance agreements, including the Davis-Bacon Act, the Section 889 prohibition on certain telecommunications and video surveillance services and equipment, and environmental permitting compliance.
  • Executive orders, specifically including Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (Jan. 21, 2025), which relates to ending diversity, equity, and inclusion efforts carried out or enforced by federal agencies.

This funding opportunity is active through September 2029, and awards will be issued on a rolling basis.  The Department will host a host an informational webinar to provide general information on the BAA, but the date of the webinar has yet to be finalized given the government shutdown. 

Photo of Michael Wagner Michael Wagner

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and…

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and enforcement actions.

Mike regularly represents contractors in federal and state compliance and enforcement matters relating to a range of procurement laws and regulations. He has particular experience handling investigations and litigation brought under the civil False Claims Act, and he routinely counsels government contractors on mandatory and voluntary disclosure considerations under the FAR, DFARS, and related regulatory regimes. He also represents contractors in high-stakes suspension and debarment matters at the federal and state levels, and he has served as Co-Chair of the ABA Suspension & Debarment Committee and is principal editor of the American Bar Association’s Practitioner’s Guide to Suspension & Debarment (4th ed.) (2018).

Mike also has extensive experience representing companies pursuing and negotiating grants, cooperative agreements, and Other Transaction Authority agreements (OTAs). In this regard, he has particular familiarity with the semiconductor and clean energy industries, and he has devoted substantial time in recent years to advising clients on strategic considerations for pursuing opportunities under the CHIPS Act, Inflation Reduction Act, and Bipartisan Infrastructure Law.

In his counseling practice, Mike regularly advises government contractors and suppliers on best practices for managing the rapidly-evolving array of cybersecurity and supply chain security rules and requirements. In particular, he helps companies assess and navigate domestic preference and country-of-origin requirements under the Buy American Act (BAA), Trade Agreements Act (TAA), Berry Amendment, and DOD Specialty Metals regulation. He also assists clients in managing product and information security considerations related to overseas manufacture and development of Information and Communication Technologies & Services (ICTS).

Mike serves on Covington’s Hiring Committee and is Co-Chair of the firm’s Summer Associate Program. He is a frequent writer and speaker on issues relating to procurement fraud and contractor responsibility, and he has served as an adjunct professor at the George Washington University Law School.

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Photo of Daniel Raddenbach Daniel Raddenbach

Daniel Raddenbach assists clients in navigating the complex regulatory regimes that apply to federal contractors. In addition to providing regulatory advice, he routinely works with clients in the government contracts M&A space to provide regulatory reviews and risk analyses of potential transactions. He…

Daniel Raddenbach assists clients in navigating the complex regulatory regimes that apply to federal contractors. In addition to providing regulatory advice, he routinely works with clients in the government contracts M&A space to provide regulatory reviews and risk analyses of potential transactions. He also represents contractors in complex disputes, including litigation and claims against the federal government and prime-sub disputes.

Most recently, Daniel has specialized in assisting clients in the semiconductor industry to apply for and negotiate CHIPS Act funding awards to construct or modernize semiconductor fabrication facilities. He regularly advises clients on the ramifications of applying for funding under the CHIPS Act programs, providing analysis on topics including CHIPS programmatic requirements, the national security guardrails, and federal labor law requirements (including Davis-Bacon), among others.

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