U.S. Commerce Department Announces $874 Million in Funding for 7 Tech Firms, Demands Equity in Return

The U.S. Department of Commerce announced on the 29th that, under the CHIPS and Science Act, it has signed preliminary memoranda of intent with seven semiconductor-related companies to provide up to $874 million in federal incentives.

This funding aims to strengthen domestic semiconductor research and development in the United States, with a particular focus on overcoming bottlenecks in artificial intelligence (AI) and high-performance computing (HPC) systems, including areas such as integrated photonics, advanced packaging, and novel computing architectures.

This funding policy marks a significant shift: the Department of Commerce is requiring, as a condition for receiving funds, that the government obtain minority, non-controlling equity stakes in each recipient company to ensure taxpayers benefit from the companies’ future growth. The Department stated that this arrangement is designed to make public funding function more like an 'investment portfolio' rather than a one-way subsidy.

However, experts and some market participants remain cautious about this model. Critics argue that government equity ownership could blur the lines between industrial policy, regulatory authority, and corporate governance, potentially affecting the decision-making independence of companies in international markets. The Department also emphasized that the current agreements are only preliminary memoranda of intent, and final award amounts and details will depend on subsequent due diligence and formal agreements.

Among the recipient companies, semiconductor foundry giant GlobalFoundries will receive the largest amount—$300 million—to develop 'co-packaged optics' (CPO) technology.

The Department stated that this technology, which uses optical signals instead of traditional copper wires to transmit data, can significantly improve computing speed and energy efficiency. It is expected to accelerate related R&D progress by two to three years.

AI memory company Kepler will receive $245 million to develop a new storage technology combining three-dimensional (3D) integration and ferroelectric materials, aiming to alleviate the 'memory wall' problem commonly seen in AI systems. Additionally, semiconductor equipment maker Multibeam Corporation will receive $140 million to develop advanced packaging technology capable of enabling thousands of high-speed connections, supporting chiplet-based heterogeneous integration.

Other funded companies include:

- Extropic: $75 million to develop thermodynamic probabilistic computing technology. - Thintronics: $50 million to develop low-loss dielectric materials for high-speed interconnects. - OBSIDIA Semiconductors: $34 million to develop a non-invasive counterfeit component detection system, enhancing supply chain security. - Aeluma: $30 million to develop large-area photonic substrate technology for AI optical interconnects.