CHIPS Act funding eligibility and the application process are administered by the U.S. Department of Commerce, which distributes $52.7 billion in grants, loans, loan guarantees, and a separate 25 percent tax credit to companies, nonprofits, and consortia that build, expand, or modernize semiconductor facilities inside the United States. Applicants must clear financial and technical review, sign a 10-year agreement restricting expansion in China and other countries of concern, and meet labor and workforce conditions before any money is released.
What Funding Is Available
The $52.7 billion authorized by the law is not a single fund. It splits into buckets, and where your project fits determines what you can ask for.
The largest piece is $39 billion for manufacturing incentives, meaning direct grants to companies building or expanding fabrication plants. Within that, $2 billion is reserved for legacy chip production, and up to $6 billion of the $39 billion can go out as loans or loan guarantees rather than grants. The Commerce Department has estimated that $6 billion in federal backing can support up to $75 billion in total financing.1Federal Register. Implementation of the CHIPS Incentives Program
Another $11 billion is set aside for research and development, including the National Semiconductor Technology Center and advanced packaging work. Smaller pots cover defense microelectronics ($2 billion), international supply chain security through the State Department ($500 million), National Science Foundation workforce and education programs ($200 million), and wireless supply chain innovation ($1.5 billion).2U.S. Senate Committee on Commerce, Science, and Transportation. The CHIPS Act of 2022 Summary
Who Qualifies
The statute uses the term “covered entity.” That includes private companies, nonprofits, and consortia that combine public, private, and nonprofit organizations, as long as the applicant can demonstrate the ability to finance, construct, expand, or modernize a semiconductor-related facility.3Office of the Law Revision Counsel. 15 USC 4651 – Definitions
“Semiconductor-related” is read broadly. It covers fabrication, assembly, testing, advanced packaging, production, and research into semiconductors, the materials used to make them, and the equipment used in manufacturing. The funded project itself must be located entirely within the United States.
Who Is Disqualified
Foreign entities of concern cannot apply. That covers any company owned by, controlled by, or subject to the direction of the governments of China, Iran, North Korea, or Russia.4National Institute of Standards and Technology. Frequently Asked Questions – Preventing the Improper Use of CHIPS Act Funding If your corporate structure includes ownership or control ties to any of those governments, the application will not clear screening.
How to Apply
Applications are submitted through the CHIPS Incentives Program Portal, run by the Commerce Department through the National Institute of Standards and Technology.5National Institute of Standards and Technology. CHIPS for America Before you file, you need to have several categories of documentation ready:
- Audited financial statements demonstrating the applicant’s financial condition
- A detailed capital investment plan for the proposed project
- Technical descriptions of the project, fitted to a specific manufacturing category such as leading-edge logic, memory, or legacy chip production
- Corporate structure documentation, including ownership and control
- Documentation of the physical location of the proposed facility inside the United States
After you file, the Commerce Department runs a multi-stage review. A merit assessment looks at the technical feasibility of the project. Then due diligence examines the applicant’s financial health, corporate governance, and the reliability of project partners. Commerce has not published a fixed timeline for these reviews. Projects that clear both stages receive a preliminary memorandum of terms setting out the proposed award structure and conditions. That memo comes before any money moves.
Accuracy in every filing matters. Discrepancies in financial data or corporate disclosures can knock an application out during initial screening. Proprietary business information should be clearly labeled at submission so it receives protection under federal confidentiality rules.
The 25 Percent Investment Tax Credit
Separate from grants and loans, Section 48D of the tax code offers an investment tax credit equal to 25 percent of qualified investments in semiconductor manufacturing facilities. It covers tangible property integral to the operation of an advanced manufacturing facility, including buildings and structural components used for manufacturing. Office space and administrative areas do not qualify.6Office of the Law Revision Counsel. 26 USC 48D – Advanced Manufacturing Investment Credit
There is a hard deadline. Construction of the qualifying property must begin before January 1, 2027. Property whose construction starts after that date does not qualify. To claim the credit, taxpayers register through an IRS electronic portal and receive a registration number for each qualified investment, which must be included on the return. Companies that claim the credit and then expand semiconductor manufacturing in a foreign country of concern within 10 years face recapture.
Conditions Attached to Any Award
Winning an award is not the end of the negotiation. Federal money brings binding conditions that survive for years.
Prevailing Wages
Every CHIPS-funded construction project must pay prevailing wages under the Davis-Bacon Act. Laborers and mechanics on the site earn rates at least equal to those paid on similar projects in the same area, including fringe benefits such as health insurance, pensions, and vacation pay.7U.S. Department of Labor. 40 USC Wage Rate Requirements This applies regardless of project size.
Childcare Plans for Larger Awards
Applicants requesting more than $150 million in direct funding must submit plans to provide affordable, accessible childcare for both the construction workers building the facility and the long-term employees who will staff it.
Workforce Commitments
For the construction workforce, an applicant must either use a project labor agreement or submit a workforce continuity plan that ensures timely project delivery. All applicants also need to establish sectoral partnerships with regional training organizations and higher education institutions to recruit, train, and place workers, with specific attention to economically disadvantaged individuals.8Congressional Research Service. Frequently Asked Questions – CHIPS Act of 2022 Provisions and Implementation
The 10-Year Guardrails Agreement
Before receiving any federal money, a company must sign an agreement with Commerce promising that for 10 years it will not engage in any “significant transaction” that materially expands semiconductor manufacturing capacity in China, Russia, Iran, North Korea, or another designated foreign country of concern.9Office of the Law Revision Counsel. 15 USC 4652 – Semiconductor Incentives
The guardrails rule defines “significant transaction” as any investment valued at $100,000 or more. That includes mergers, acquisitions, joint ventures, long-term lease arrangements, capital expenditures, and the formation of subsidiaries. A series of smaller transactions that add up to $100,000 or more across the 10-year period can also trigger a violation.10Federal Register. Preventing the Improper Use of CHIPS Act Funding
A narrow legacy chip exception applies. Legacy semiconductors are defined as logic chips at the 28-nanometer node or older, DRAM memory with a half-pitch greater than 18 nanometers, and NAND flash with fewer than 128 layers. Companies can continue operating and even expand legacy production in countries of concern, but only if at least 85 percent of the facility’s output by value is consumed in that market.11Federal Register. Preventing the Improper Use of CHIPS Act Funding Commerce updates the legacy definition at least every two years, so a technology inside the exception today can move outside it later.
Within any facility, “significant renovations” also trigger the rule. That means building new cleanroom space, adding a production line, or any physical expansion that increases semiconductor manufacturing capacity by 10 percent or more over the life of the agreement.
How the Money Can Be Taken Back
The clawback triggers are worth reading before signing anything.
- Missed deadlines. Every award sets target start and finish dates. If a company falls behind, the Secretary can progressively recover funds up to the full award. A waiver is possible only for delays the company could not have foreseen or controlled, and Congress must be notified within 15 days.
- Foreign expansion violations. If a company breaches the 10-year guardrails agreement and does not stop or cure the violation after notice, the government recovers the full award. The Secretary can negotiate mitigation instead of full recovery, but only after consulting the Secretary of Defense and the Director of National Intelligence.
- Technology transfer. If a company knowingly engages in joint research or technology licensing with a foreign entity of concern involving technology that raises national security concerns, the government recovers the full award. Commerce must communicate which technologies raise national security concerns before this trigger applies.
Companies certify their compliance with expansion restrictions as part of ongoing reporting.9Office of the Law Revision Counsel. 15 USC 4652 – Semiconductor Incentives
After the Award
Receiving CHIPS funding starts a long-term compliance relationship. Commerce retains authority to audit facility operations, review cybersecurity protections, and verify that the technology being produced remains secure from unauthorized access. Personnel working in funded facilities face background check requirements, and manufacturing areas operate under access controls.
Federal grant recipients must retain all financial records, supporting documents, and other records related to the award for at least three years after submitting the final expenditure report.12eCFR. 2 CFR 200.334 – Record Retention Requirements Because CHIPS awards involve 10-year guardrails and multi-year construction schedules, the practical record-keeping burden runs well past that floor. Plan on holding detailed documentation for the full life of the agreement and several years beyond, and treat each reporting deadline and certification as if the full award depends on it. Under the clawback provisions, it does.