US semiconductor industry needs public-private partnerships for an innovation ecosystem

Authors: Mark LaViolette, David Kotok, Joniel Cha

Organizations looking to successfully unlock federal semiconductor incentives and research and development (R&D) funding should consider aligning with consortia and public-private partnerships (PPPs). There is some urgency to this: In late September, the US Department of Commerce announced that the Notice of Funding Opportunities will be released in February 2023.

According to the Department of Commerce document, A Strategy for the CHIPS for America Fund, PPPs and consortia are critical to “enable and sustain a vibrant industry that supports quality jobs, a diverse workforce, and a robust supplier base.” The CHIPS Act legislative requirements driving implementation are quite prescriptive as outlined in the CHIPS.gov website, but an underlying theme is no single entity can achieve the intended national objectives on its own. An ecosystem effort is needed, especially one that is regionally/locally focused, innovation-centric, economically sustainable, and resilient. Applicants for CHIPS funding must consider how their applications serve underrepresented populations with unions and workforce development organizations, partner with local communities, and provide benefits to small businesses and startups. This is not an easy task.

To meet these requirements, CHIPS Act applicants will spawn multiple consortia and PPPs aligned to incentive and R&D programs, including the following:

• National Semiconductor Technology Center
• National Advanced Packaging Manufacturing Program
• Up to three new Manufacturing USA institutes
• Multiple consortia spearheaded by leading semiconductor manufacturers seeking access to the $39 billion in incentive grants, cooperative agreements, loans, or loan guarantees
• Over $4 billion for related programs at the Department of State, the National Science Foundation, the Department of Defense, and Commerce’s National Telecommunications and Information Administration (NTIA)

There are many reasons why consortia and PPPs are effective; most importantly, they help solve collective action problems, helping enable members to tap into critically valuable and synergistic stockpiles of intellectual property, and providing access to shared assets. They can enable innovation and market action to occur more efficiently. In addition, these partnerships have formal mechanisms to incentivize cost-sharing, especially for R&D projects, and an ability to attract public and private funding beyond Federal investments.