New Rare Earth Funding Issued Under CHIPS Act

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Written by Paul Wiseman for IIR News Intelligence (Sugar Land, Texas)

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Summary

The 2022 CHIPS and Science Act created a $52 billion investment in U.S. semiconductors. In January, the NIST, which administers funding, announced a new recipient. What else has it done, and how has the Trump administration changed it?

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The CHIPS Are Up

On January 26, the Department of Commerce's CHIPS Program Office announced the signing of a non-binding letter of intent to provide up to $277 million in direct funding and up to $1.3 billion in a senior secured loan to USA Rare Earth (USAR) under the CHIPS and Science Act.

The bipartisan legislation, which is aimed at boosting the U.S. semiconductor industry and critical minerals availability, was signed into law in August 2022. In the Senate, 17 Republicans voted in favor, and in the House, 24 Republicans voted aye. Only one congressperson normally aligned with the Democrats--independent Sen. Bernie Sanders (VT)--voted against it.

CHIPS is an acronym for "Creating Helpful Incentives to Produce Semiconductors." This most recent proposed funding will support two projects in Texas and Oklahoma that combine for an estimated capital investment of $3.3 billion.

It will increase production at USAR's advanced manufacturing project in Stillwater, Oklahoma, and establish on-site metallization and strip-casting capability. The official release adds that USAR's plant in Round Top, Texas, will be the only U.S. facility to handle the entire process, including mining, extracting rare-earth oxides, converting them to metals, and turning them into feedstock for neodymium iron boron (NdFeB) permanent magnets (also known as "rare earth magnets").

Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Plant Database can learn more from detailed profiles of the Stillwater and Round Top plants.

Ownership Tradeoff

In return, says a press release from the National Institute of Standards and Technology (NIST), "In conjunction with the proposed CHIPS funding, the Commerce Department will receive approximately 16.1 million USAR shares and a warrant for another 17.6 million shares."

By the Numbers

• $52 billion: Money allocated by the bipartisan 2022 CHIPS and Science Act
• 10 Years: Timeline for the act to onshore significant percentage of semiconductor manufacturing

History of CHIPS

The 2022 law initiated a 10-year timeline for tripling U.S. semiconductor manufacturing capacity, which would put the U.S. in a global leadership position. Onshoring manufacturing and boosting research and development (R&D) would push allow U.S. industry and technology ahead.

About $39 billion has been either proposed or awarded to 17 projects, mostly in the Upper Midwest, Eastern Seaboard, Texas and West Coast.

But since taking office, U.S. President Donald Trump has sent mixed signals about his own thoughts on the CHIPS Act. He campaigned against it in the 2024 election cycle. In March 2025, addressing a joint session of Congress he called it "a horrible, horrible thing," noting that tariffs instead of the CHIPS Act induced Taiwanese chipmaker TSMC to invest $100 million in new U.S. factories. He ordered Speaker of the House Mike Johnson to rescind the bill and spend it on deficit reduction or something else.

But just a few weeks later (March 31, 2025), President Trump issued an executive order establishing the Investment Accelerator, saying, "It is in the interest of the American people that the Federal Government dramatically expand its assistance to companies seeking to invest and build in the United States."

It ordered the secretaries of the Treasury and Commerce to establish within the Commerce Department "an office named the United States Investment Accelerator" to speed investment above $1 billion in the U.S. by reducing regulatory delays and to "facilitate research collaborations with our national labs" and state governments.

Administration Now CHIPS In

With that new focus, the administration has renegotiated several of the Biden-era agreements. In many they have shifted from sending money to getting equity in companies, as with USAR. In August 2025, the government acquired a 9.9% stake in Intel, using $5.7 billion of grant and $3.2 billion in other federal funding.

About that time, chipmaker Micron finalized a $275 million CHIPS Act direct funding award to enlarge its facility in Manassas, Virginia. That will allow it to onshore its 1-alpha DRAM (dynamic random-access memory) chips used in industrial, automotive, defense, aerospace and medical equipment.

Construction on that was slated to begin by the fourth quarter of 2025, but there has been no indication of any dirt being turned. Subscribers can learn more from a detailed plant profile.

The administration also cancelled $285 million in funding for the SMART USA Institute, which was aimed at promoting research into digital twins for chip manufacturing.

Some Top CHIPS Recipients

Of the original $56 billion, about $33 billion in funding and $5.5 billion in loans have been awarded. Some top recipients include:

• TSMC: About $6.6 billion for three Arizona fabs (each with 2-nanometer capability); subscribers can learn more from a plant profile and a detailed list of project reports.
• Microchip Technology: $162 million for Oregon and Colorado upgrades; subscribers can learn more from a profiles of the plants in Gresham, Oregon and Colorado Springs, Colorado plants, and a detailed list of project reports.
• BAE Systems: $35 million for New Hampshire defense electronics. Industrial Info is tracking a total of 23 BAE Systems plants either open or planned; subscribers can learn more from a detailed list of project reports.
• Amkor Technology: $2 billion for a new Arizona packaging facility; subscribers can learn more from a plant profile and a detailed list of project reports.

Key Takeaways

• Trump originally vilified the act as wasteful and less effective than tariffs at onshoring critical semiconductor manufacturing, but he has since endorsed it.
• Trump has modified some agreements and is shifting some money away from grants/loans, toward the government buying a stake in some of the companies awarded.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR News Intelligence) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 250,000 current and future projects worth $30.2 trillion (USD).