US invests $5 billion into semiconductor R&D: How can businesses capitalize?

US invests $5 billion into semiconductor R&D: How can businesses capitalize?

US invests $5 billion into semiconductor R&D: How can businesses capitalize?

 "A nation that doesn't invest in R&D is a weak nation," said US Energy Secretary Jennifer Granholm at a White House event last week. She added, "We're not going to be weak anymore," as she unveiled the new $5 billion National Semiconductor Technology Center (NSTC).

The NTSC is the first step in over $11 billion of research and development investments in semiconductor manufacturing, launched as part of the Biden Administration’s flagship Chips and Science Act (CHIPS), which passed in August 2022.

The CHIPS Act set aside a total of $52.7 billion to boost semiconductor production in the US and streamline the supply chain for new chips. This helps American businesses get easier access to the chips they need to power innovative products and technologies.

While $39 billion of the CHIPS Act is dedicated to subsidies for US-based semiconductor production, $11 billion—including the $5 billion NTSC—is focused on advancing semiconductor technology and reestablishing the US as a leader in tech manufacturing, not just a place where ideas are born before being built overseas.

A key feature of the CHIPS Act is a 25 percent investment tax credit for building chip plants, valued at $24 billion.

A public-private partnership for the entire US innovation ecosystem

At the White House launch of the NSTC, US Commerce Secretary Gina Raimondo described the center as a "public-private partnership where government, industry customers, suppliers, academics, entrepreneurs, and venture capitalists can come together to innovate, connect, network, solve problems, and help Americans compete—and win—on the global stage."

Alongside the launch of the NSTC, Raimondo and Granholm also announced that several major funding awards will be revealed in the next two months to help kickstart new semiconductor manufacturing facilities in the US.

"These are highly complex, first-of-their-kind facilities," Raimondo told the press, adding, "These are next-generation investments—size, scale, and complexity we've never seen before in this country." She noted that Samsung and Intel are among the major brands competing for this funding.

Benefits beyond manufacturing

While a significant portion of these new investments will go to large manufacturers who already play a major role in the innovation economy—both in the US and globally—these initiatives also open up a world of opportunities for emerging players in the American tech sector.

For starters, by connecting to a more local semiconductor supply chain, startups and scaleups will not only be physically closer to the parts and materials they need to create new products, but they'll also face fewer cross-border challenges—like shipping costs and international taxes—when sourcing critical chips.

The plan also includes a Workforce Center of Excellence as part of the NSTC, with locations in multiple regions to strengthen education and training for some of the most in-demand R&D skills.

With access to a skilled local workforce, US companies will be able to tap into more homegrown talent to drive innovation—not just in semiconductors, but across a wide range of related fields.

By tapping into US-based resources and workers, businesses may also increase their eligibility to leverage key R&D tax credits to fund their product development and stretch their innovation budgets further than ever. 

A nationwide network of tech hubs

This latest announcement builds on progress made throughout the fall to fund innovation as part of the CHIPS Act.

In November, the Biden administration announced more than 30 measures to strengthen domestic and global supply chains—aimed at fighting inflation and boosting the US clean energy ecosystem.

While these measures were presented as a win for consumers in the president’s address, the new Supply Chain Resilience Council actually builds on the administration’s efforts to create more opportunities for businesses in emerging sectors.

Similarly, the Commerce Department unveiled the creation of 31 Tech Hubs across 32 states and territories back in October to encourage innovation and promote growth outside of the country’s traditional economic epicenters. Dubbed the Regional Technology and Innovation Hub Program, the program addresses a need for greater investment from both the government and the private sector toward businesses outside of a handful of U.S. cities (ie. Austin, Boston, New York City, San Francisco and Seattle), according to statements from the administration. 

Leveraging government funding—and R&D tax credits—to maximize innovation investments

Together, these measures lay the foundation for innovative US businesses to develop entirely new solutions, with support from the federal government and a broad network of stakeholders—from entrepreneurs to VCs to academics—across the tech ecosystem.

For example, as more funding is directed toward phasing out legacy, non-renewable energy systems, founders have new chances to partner with government and institutions to develop products that could launch entirely new industries.

And because all this innovation happens and stays in the US, businesses can take advantage of new programs created by the CHIPS Act, as well as existing R&D tax credits (like IRC Section 41) that reward American entrepreneurs.

While public-private partnerships—combining government funding, private capital, and institutional resources—are essential for strengthening local tech ecosystems, individual entrepreneurs should also adopt a similar approach to funding their ventures.

At Boast, we’ve helped thousands of startups across North America secure non-dilutive funding to power their product roadmaps and boost their R&D. Our platform brings together key financial and project tracking tools in one place, giving you the insights you need to optimize your strategy and maximize the impact of your team’s innovation.

Businesses that work with Boast to capture their R&D tax credit claim on average enjoy 20 percent higher returns than those who either work with competitors or attempt claiming on their own.

By combining decades of combined human expertise in navigating tax code—while also being a team of founders in our own right—with a platform that synchronizes key financial, project workflow and payroll data into a single system of proof, Boast leaves no stone unturned in digging deeper to uncover all of your credit-worthy activities.

To learn more about the R&D tax credits available from the US government and how you can use them to accelerate your product development, download our Guide.