Enabling the CHIPS R&D Agenda

This is a crosspost with Factory Settings, an Institute for Progress newsletter by the former senior leadership of the CHIPS Program Office. ​Factory Settings is about building in two senses of the word: Building capacity within government, and building production capacity in the US for critical industries. You can subscribe to Factory Settings here:

Factory Settings Editor’s Note:

In August 2025, Secretary of Commerce Howard Lutnick cut funding to Natcast, a multi-billion dollar semiconductor R&D initiative enabled by the CHIPS and Science Act (also referred to as the CHIPS Act). Lutnick claimed that Natcast violated the law and accused the initiative of cronyism.

Taking a closer look at the program makes clear that these were misplaced accusations. The structure was neither radical nor corrupt, but rather a serious attempt to achieve the program’s outcomes under an ambitious mandate. It seemed like Natcast was on track to succeed — sunsetting it puts years of deliberate development to waste.

Today we bring you a piece that explains Natcast’s design from one of the leaders who set it up, Donna Dubinsky.

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Although much attention has been focused on the $39B allocated by the CHIPS Act to build fabs¹, Congress also provided the Department of Commerce with $11B for research and development (R&D), the centerpiece of which was called the National Semiconductor Technology Center, or NSTC.² The Act specifies that the NSTC should conduct research and prototyping of advanced semiconductor technology, grow the domestic semiconductor workforce, and establish an investment fund. Congress required that this effort be operated as a public private-sector consortium with participation from industry, academia, the Department of Defense, the Department of Energy, and the National Science Foundation.³

Implementing this vision raised difficult questions. What institutional structure could balance government oversight with private-sector commercial mindset and speed? How should research priorities be set, and by whom? Should the effort be short-term or long-term? Below, I describe the gaps the NSTC was designed to fill, the key decisions we made in standing it up, and the lessons future policymakers should draw from its creation — and its termination.

NSTC was established to fill gaps in US semiconductor R&D

While tens of billions of private dollars are spent on semiconductor research in the US each year, some clear gaps still remain.

• Shared research facilities: The cost of creating a modern semiconductor research fab or advanced packaging facility is in the multiple billions of dollars. Production fabs are optimized for volume, not experimental work. While big companies have dedicated research facilities, some research needs cannot be served in-house because of possible material contamination or disruption to the production workflow. Smaller companies and academics have constrained access to such facilities altogether. Other governments, including China, Japan, and the European Union, have made large public investments to establish shared research facilities which are used by companies from around the world. The US has nothing comparable, thus sending advanced research overseas.

• Pre-competitive research: Certain research will not yield products today but lays the groundwork for future development. Much of this work happens in universities or university-industry partnerships, while companies focus on near- to medium-term products. The NSTC would fund this longer-horizon research, bridging the gap between academic discovery and commercial application.

• Workforce development: Companies tend to invest limited capital in targeted programs to fill identifiable, near-term needs rather than uncertain, long-term needs. Government funds can be used to expand education to prepare next-generation workers for future jobs across the growing industry.

• High-risk investment: The cost and time from idea to market for new semiconductor technology has grown so large that most private investors cannot tolerate the risk. For example, the last major innovation of the semiconductor industry, the FinFET, took 17 years to mature from university research to production by Intel. Venture capital invested in chips has declined from almost 5% of total VC dollars in 2010 to just over 1% today. Government funds can stimulate private investment in high-potential American semiconductor start-ups.

The public-private consortium model was well suited to this effort: the NSTC vision required diverse private-sector skills (technical expertise, workforce training experience, venture investing knowledge), the capital to build shared facilities, and a direct collaboration to yield both national security and commercial benefits.

Implementation decisions

After the CHIPS Act passed, Secretary Gina Raimondo convened a team to evaluate how best to execute the NSTC. We gathered input from all constituents — the private and academic sectors (particularly the Industrial Advisory Committee formed under the CHIPS Act), the other agencies named in the Act, and the White House Office of Science and Technology Policy.

1. Grant program or an institution?

One foundational question was whether the NSTC should operate as a series of time-limited grant programs or as a lasting institution managing long-term assets.

Grant programs could be launched quickly using established government vehicles, but in deciding between a cluster of programs and a new institution, we needed to consider congressional intent. Most significantly, the Act mandated activities that required long-term investment at a large scale, particularly prototyping capabilities and advanced packaging facilities. These activities would consume most of the appropriations. While they could be implemented with the help of partners, they would need funding beyond the CHIPS appropriation. An institution that could recruit members, offer fee-based services, and build private-sector financial support was required.

2. What is the right institutional structure?

Having determined that the NSTC vision required an institution rather than a series of funding programs, we studied existing public-private partnerships and legal precedents to understand best practices. Two models were especially instructive. SEMATECH, a US semiconductor research consortium formed in the late 1980s, initially succeeded but collapsed after it stopped accepting government funds and became dominated by a few large firms. By contrast, imec, an independent nonprofit founded in Belgium in 1984, has thrived for over 40 years by maintaining independence while retaining approximately 20% public funding. The table below summarizes the models we examined.

Drawing on these lessons, we evaluated governance structures against the criteria our research had established: sector-wide independence, ability to attract senior talent, operational speed, capacity to attract private capital, and ability to create a strong government partnership. We concluded that we needed a new, focused nonprofit — purpose-built to attract senior talent, partner with the government, and earn industry credibility.

To comply with the Government Corporation Control Act (the GCCA), which prohibits the government from creating and managing a corporation without statutory authority, the Department selected experienced independent citizens through an open federal application to appoint a board. The initial board of trustees selected by the citizen committee included accomplished retired semiconductor executives, leading academics, and experienced corporate directors (I left the government and joined this board). The new board incorporated a nonprofit eventually named Natcast and hired an executive team who negotiated a contract with Commerce to operate the NSTC. This governance structure is not uncommon: SRI, In-Q-Tel, and Natcast all operate through standard government contracts rather than government board control.

3. What is the right balance between government and private sector involvement?

Structuring the government-Natcast relationship was complicated. Too much government power risked politically driven decisions on programs and difficulty recruiting talent. Too much private-sector power risked national needs going unmet and domination by the largest companies.

The solution separated agenda-setting from execution. The government, Natcast staff, and a technical advisory board (comprised of leading technologists from industry and academia) would propose research topics; the government would approve topics and funding levels; Natcast would then run operations — awarding contracts and selecting recipients on purely technical and operational criteria such as feasibility, potential impact, and team experience, free from political interference or industry dominance. Natcast remained fully accountable through rigorous contractual obligations, national security compliance, and extensive reporting to Commerce. The same model applied to other programs such as workforce development and the investment fund; the government and Natcast together set strategic priorities, while Natcast selected and managed execution decisions.

4. When should we spend our appropriations?

We engaged a consulting firm to build a long-term financial model, proposing to use the appropriated funding — which fortunately did not expire — over 10 years, with preliminary budgets, membership structures, and program costs.

A strategic tension persisted. Many felt the goal was full self-sustainability by year 10. Others, myself included, believed ongoing government funding was critical — particularly for pre-competitive research that industry wouldn’t fund. When the entity is fully self-sustaining, there is no obligation to fulfill national interests, only corporate near-term objectives. The SEMATECH and imec case studies support this conclusion, with SEMATECH collapsing after declining government funding and imec succeeding over many years with ongoing support from the EC and the Flemish government. Since such continuing national support couldn’t be guaranteed, the model presumed self-sustainability — but one could return to Congress in five to six years and use successful outcomes to make the case for ongoing funding. In effect, the issue was deferred.

What we built

Natcast was incorporated in October 2023 and set about developing its own strategic plan, operating plan, and financial strategies. Although there were multiple major programs to create, Natcast made progress on all fronts:

• Early research programs were announced and some grants awarded; several other calls for proposals were ready to release.

• A Technical Advisory Board was established and a research agenda articulated.

• Partners were selected to build the prototyping center and the advanced packaging facility, and the EUV center was under contract, ready to start implementation.

• The Investment Fund was fully specified and had attracted substantial private interest.

• Workforce development programs were underway with academic institutions across the country.

• A variety of other programs were designed such as shared digital resources and a multi-project wafer capability

• Over 200 companies and institutions joined as dues-paying members.

Less than two years after creation, Natcast was executing well and meeting its goals.

What happened?

In late August 2025, Commerce announced its intention to discontinue Natcast as the NSTC operator. The contract was terminated on the pretext that Natcast’s creation violated the GCCA, despite extensive review on this question within Commerce’s legal department and a green light from the Department of Justice’s Office of Legal Counsel in the Biden Administration.

Commerce’s current plans are unclear. In September 2025, the Department announced a research grant program, but only one preliminary award has been made public. NIST suggested that the new approach “will mirror a more venture capital-style approach” and “strongly recommended that applicants include an approach to financial return on investment” for the government in their proposals such as granting the government equity, warrants, licensing, royalties or revenue sharing.

Beyond Natcast’s discontinuation (and the apparent termination of the NSTC itself), the Industrial Advisory Committee has been disbanded, the National Advanced Packaging Manufacturing Program is not active,⁴ the new semiconductor-focused Manufacturing USA Institute has been discontinued, and the Consortium Steering Committee has not met since the change of administration.⁵ As these activities are mandated by the CHIPS Act, it is not clear how Commerce intends to comply with the Act without substantially increasing staff — at odds with the administration’s push for smaller government. From the outside, the new CHIPS R&D vision appears more like a profit-driven investment program than a provider of core infrastructure benefiting all participants and prioritizing American national and economic security.

Lessons for future policymakers

Natcast arose out of careful study and deliberation with multiple stakeholders, fulfilling the ambitious mandate Congress passed in the CHIPS Act. Despite the substantial progress in realizing this vision, it was hastily abolished without a clear replacement plan.

While it might be impossible to legislate against this kind of reversal in the future, I believe that if Natcast had been six months further along, it is less likely that its work would have been halted because many more constituents would have been impacted. This underscores how critical it is to move quickly. The program was delayed, in part, by preferencing the incentives program for leadership attention, the need to work across multiple government agencies, and by the substantial delay needed to resolve legal issues to ensure compliance with the GCCA.

In thinking about future programs, policymakers should consider the following:

1. Match investment time frames with desired outcome time frames. To the extent that a policy has a long-term goal, it needs to be matched with a long-term investment structure. Had the R&D part of the CHIPS Act been viewed as a short-term need, say research programs and not facilities, it could have been clearly defined and easily implemented. But since the NSTC was envisioned as a long-term effort to become globally competitive, it needed the corresponding ability to execute over the long term. By contrast, the $39B fund for incentives was imagined and executed as a time-limited grant program.
   
   Two specific long-term aspects could have been enabled in the legislation. First, if the legislation had permitted the creation of a government corporation, that would have been a possible execution path. In that case, the effort would have been more insulated from political change because the governance structure could have had several trustees appointed by the current administration, enabling a new administration to impact the agenda without resorting to outright cancellation. Second, the question of sustainability could have been addressed through some notion of continued funding possibility, particularly for the research program, even if not an explicit commitment. A model that spelled out a funding renewal process (contingent upon program success) would have enabled planning that could presume ongoing government participation.
   

2. Designate clear responsibility for implementation. The CHIPS Act called for the Department of Commerce to lead implementation, giving a clear signal that commercial success was as important as national security. Congress provided separate funding to the Department of Defense to address national security needs. However, the Act also required Commerce to set up the NSTC “in collaboration with the Secretary of Defense” and it required participation from the Department of Energy and the National Science Foundation.
   
   While it is admirable to strive for agreement among multiple agencies, we found that the complexity of consulting so many agencies (as well as the White House) on so many programs caused unnecessary delay. For example, the Act could have said that Commerce would design the program in consultation with the other agencies, but not require active collaboration or participation.

   I estimate that, had we been able to create a government corporation and just consult with other agencies rather than fully including them in program design, the program could have been launched nine months to a year earlier — critical timing for an urgent program.
   

3. Establish a group of expert advisors. The CHIPS Act specified the creation of an Industrial Advisory Committee for the research effort. Appointing and convening this group was one of the earliest activities undertaken at Commerce. Although there were many other ways we received input, including RFIs, individual meetings, papers presented by constituents and industry colloquia, there is no doubt that the IAC was the most efficient means of getting high-quality input.

   An excellent group of technical advisors from industry, academia, and government was selected and their reviews and reports turned out to be invaluable for our work. Although bringing together a group of fiercely competitive companies risks inviting a battle of parochial needs, in this case, the individuals selected and the effective management of the IAC enabled a truly collaborative effort. Whether articulated in legislation or not, the thoughtful selection of key individuals from the private sector to advise the program design can surface relevant input efficiently.

Conclusion

The cancellation of Natcast’s contract dismantled a new institution poised to make a generational investment to address structural gaps in America’s semiconductor research ecosystem. The research agenda, the prototyping and advanced packaging facilities, the investment fund, the workforce pipeline, and the 200-member consortium cannot be replicated with a short-term grant program. What Commerce has proposed to replace the entire NSTC program is a grant program that demands equity stakes and revenue sharing from recipients, and is thus unlikely to attract broad industry participation. The damage will compound over time as researchers, start-ups, and industry partners redirect their efforts to better-supported ecosystems overseas.

The deeper lesson here is about policy continuity. Major semiconductor technology developments take decades and require collaboration between industry, government, and academia. China, Japan and the EC are executing semiconductor development plans well, with consistent funding and institutional support, often across leadership transitions. The United States will not succeed in this geopolitical competition if critical programs can be canceled every four years. The NSTC’s termination signals to industry, to allies, and to rival nations that American industrial policy commitments are provisional.

The creation and funding of the NSTC was a compelling, bipartisan effort to address clear gaps in our industrial ecosystem, and Natcast’s potential was promising. Future policymakers should strive to insulate such initiatives from political headwinds. NSTC and Natcast’s elimination is a missed opportunity for American leadership in the industries of the future and for our national security.

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Donna Dubinsky has spent her career in Silicon Valley helping to advance technology. She is a serial entrepreneur and was CEO of Palm, Inc. and co-founder of Handspring and Numenta, a neuroscience-based AI company. She joined the Commerce Department in 2022, reporting to the Secretary of Commerce, to lead the Department’s implementation of the CHIPS Act. She left the government and subsequently served as an unpaid trustee at Natcast. These comments represent her personal opinions and not those of any organization or other individuals.

1. “Fabs” is the term used for semiconductor manufacturing (or fabrication) facilities.

2. Not to be confused with the White House Office of Science and Technology Policy’s National Science and Technology Council.

3. 15 U.S. Code § 4656 “Subject to the availability of appropriations for such purpose, the Secretary of Commerce, in collaboration with the Secretary of Defense, shall establish a national semiconductor technology center to conduct research and prototyping of advanced semiconductor technology and grow the domestic semiconductor workforce to strengthen the economic competitiveness and security of the domestic supply chain. Such center shall be operated as a public private-sector consortium with participation from the private sector, the Department of Energy, and the National Science Foundation. The Secretary may make financial assistance awards, including construction awards, in support of the national semiconductor technology center.” And ”The functions of the center established under paragraph (1) shall be as follows:...To establish and capitalize an investment fund, in partnership with the private sector, to support startups and collaborations between startups, academia, established companies, and new ventures, with the goal of commercializing innovations that contribute to the domestic semiconductor ecosystem…”

4. Although I have not covered the NAPMP program in depth in this piece, it was a critical part of the CHIPS Act. NSTC’s role was to execute the facilities component of the NAPMP program, while the research program would be managed directly from NIST. Many industry followers view advanced packaging capabilities as an important frontier for development. There are no advanced packaging facilities in the US and the CHIPS Act was to fill this gap.

5. The Consortium Steering Committee was constituted by the Department of Commerce to oversee the strategic direction of the NSTC. It included representatives from DOC, Department of Defense, Department of Labor, National Science Foundation and the private sector.