Commerce Voids $7.4 Billion Chip Research Deal, Pulls Oversight Back
The Commerce Department scraps Natcast’s role in managing semiconductor funding, shifting the $7.4B NSTC project under direct federal control.
Washington, August 25 EST: The Commerce Department has scrapped a $7.4 billion research grant agreement that had been set up under the Biden administration to steer federal semiconductor funding, pulling the project back under direct government control.
Commerce Walks Away From Natcast
At the center of the reversal is Natcast, a nonprofit created to manage the National Semiconductor Technology Center (NSTC). Commerce Secretary Howard Lutnick called the group a “semiconductor slush fund,” arguing it was built outside the law and run by former administration officials without meaningful oversight.
Instead, the National Institute of Standards and Technology (NIST) will now take charge of the NSTC. For chipmakers and research labs, that means future grants will flow through a federal agency rather than a private board.
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Spending In Limbo
It remains unclear how much of the $7.4 billion Natcast had already committed. Facilities in Albany, New York, and Tempe, Arizona were expected to be among the early beneficiaries, and industry executives say they are waiting for word on whether contracts already in motion will be honored or delayed.
In an industry where timing shapes investment decisions, uncertainty about funding carries weight. Companies weighing whether to put new R&D work in the U.S. or overseas now face another layer of hesitation.
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A Fault Line In U.S. Industrial Policy
The collapse of the Natcast structure highlights a broader tension in American industrial policy. The CHIPS and Science Act, passed in 2022, was designed to put the U.S. back at the center of advanced chipmaking. Part of that pitch was creating new entities that could work quickly with the private sector.
But the Biden-era approach is now being cast as a misstep. Lutnick framed the nonprofit model as a way of shifting responsibility off the government’s books, saying it blurred accountability and invited conflicts. That critique taps into a long-running U.S. discomfort with public-private hybrids too private to be transparent, too public to be efficient.
Global Clock Keeps Ticking
The U.S. isn’t moving in a vacuum. China, Japan, and Europe are all investing heavily in their own chip sectors. Every quarter lost to political or bureaucratic resets risks eroding the very advantage Washington is trying to build.
For chip executives, the situation is less about politics than predictability. The NSTC was billed as a stable hub for long-term research. With management changing hands midstream, the risk is that projects stall just as global competitors accelerate.
What Comes Next
NIST is now responsible for restoring confidence and keeping the program on schedule. Lutnick insists the reset will strengthen oversight without slowing down progress. But for companies already mapping decade-long investment cycles, the episode is a reminder that Washington’s ambitions for chips remain vulnerable to the politics of how money gets spent.
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A Wall Street veteran turned investigative journalist, Marcus brings over two decades of financial insight into boardrooms, IPOs, corporate chess games, and economic undercurrents. Known for asking uncomfortable questions in comfortable suits.
