CHIPS, TIP, and Regional Engines: Re-Establishing the American Semiconductor Market

Today the United States has a fingerhold on the global semiconductor market, barely 12% compared to the robust 37% we had a quarter-century ago. Despite the world’s hunger for electronics, the U.S. government’s investment in chip manufacturing declined during the 1990s and early 2000s, while other countries filled the gap.[1]

At the same time, research investments in chip design and manufacture remained flat, after huge gains during the heyday of the 1980s. Beyond losing market share, the U.S. has become dependent on other nations, including occasionally hostile trading partners like China, for our electronic needs.

To address this problem, Congress passed the “Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science” Act in 2022, with an addendum in 2024. The CHIPS Act authorizes $3.1 billion (US) to promote and support technology research, development, and transfer from regional centers to private industry[2].

Directorate for Technology, Innovation, and Partnership (TIP)

The National Science Foundation (NSF) is the agency tasked with enacting CHIPS, and will do so through its Directorate for Technology, Innovation, and Partnership (TIP). Through TIP, the Regional Innovation Engines will initiate and distribute the CHIPS funding and oversee the planned NSF projects.

Initially there will be ten regional Engine programs, including universities, nonprofits, businesses, and other groups. These Engines will be eligible to receive grants of up to $15 million over the next two years (2023-2025). Satellite projects will extend out from the primary Engine sites.

Regional Innovation Engines

The regional Engines have a wide range of technology foci, working on everything from biotechnology to cybersecurity. However, the primary goal remains improving semiconductor and chip manufacture within the United States. Developing fabrication facilities and training the next generation of designers and programmers is the first goal of the Engines, along with upgrading existing facilities.

Despite the enthusiasm of the CHIPS Act and its bipartisan supporters, one element lacking in the language of the Act and subsequent fact sheets and guidance. That was protection for the technologies developed and used in the drive to create the technological wonders demanded by the Act.

An early article in IP Watchdog,[3] published a week after the original bill was signed, noted that “patent” appeared only four times in the extensive document, and worried that intellectual property rights had been overlooked in the rush to reinvigorate the American technology market.

Patent Protection and Registration

A utility patent can cost between $10,000-20,000. Defending a patent in court can run into the hundreds of thousands of dollars, particularly in the rarefied world of high-end electronics, biotechnology, and fabrication. Before schools or research companies jump into business with the federal government, it isn’t unreasonable to ask whether their inventions will be protected from patent thieves.

The Act is silent on any individual or joint ownership of any product developed during or with CHIPS Act funding. For instance, if Intel R&D were to develop a new coprocessor during its tenure as a regional Engine, having disseminated funds to a satellite fabricator, there is no language in the Act about whether Intel must share the information with the government or not.

The 2024 Request for Funding from the NSF to Congress includes this line item:

Partnerships for Innovation (PFI): Provides NSF-funded researchers the opportunity to enter into partnerships to accelerate the transition of discoveries from the laboratory to the marketplace. In addition to supporting prototyping, technology demonstration, and scale-up work, including licensing of NSF-funded research outputs, PFI will grow its support for patent expenses for intellectual property reduced to practice.[4](emphasis added)

This is the single reference to patent expenses. It is possible that the absence of patent protection in the Act means that companies must include any requests for expenses in their individual contracts; if so, it should have been explained in the Act rather than included by omission.

Patent and Trademark Office Participation

Perhaps because of the lack of other patent protection, the U.S. Patent and Trademark Office (USPTO) launched a pilot program beginning in November 2023 to fast-track patent applications under the CHIPS Act.

The Semiconductor Technology Pilot Program[5] only covers the first thousand applications, but the USPTO may expand the program if it is successful. The program advances certain applications out of the normal track but does not require the special requirements of the normal acceleration program.

Recommendations For Participation

Fabricators, suppliers, and other agencies can apply at regional Engines to participate in the CHIPS Act funding (See, e.g., National Institutes of Standards and Technology [NIST] FAQ)[6].

To protect existing patents and any future patents that may arise from work through the regional Engines, participants should do several things:

  • Consult a private patent attorney before making any final decisions with the NSF or Engine
  • Include patent protection and registration in your RFP or application. The cost of any registration and litigation should be included as part of your contract cost
  • Inquire about patent protection when applying with the regional Engine. If your company or agency does R&D or intellectual property, you want to ensure your work is protected

The regional Engines have the ability under the CHIPS Act to reimburse patent fees and costs, but to date except for the single line item referencing “Partnerships for Innovation”[7] there is little information about how this reimbursement will work or what companies must do to obtain funding.

Conclusion

Although the CHIPS Act appeared to have stalled, as of 2024 it may be picking up speed again, with Microsoft’s establishment of an AI datacenter on the site of the failed Foxconn plant in Racine, Michigan, and supercomputer sites being installed in California universities.

Companies interested in CHIPS Act funding should pay close attention to activities in their area and continue monitoring Regional Innovation Engine websites. It is likely that funding will not come directly from the federal sites, but through secondary agencies. In that case, patent protection will be a matter of contracting with the agency providing the funding, rather than with the government.


[1] https://www.semiconductors.org/chips/

[2] https://new.nsf.gov/chips#recent-news-48e

[3] https://ipwatchdog.com/2022/08/14/chips-science-act-neglects-importance-ip-rights-encouraging-american-innovators/id=150849/

[4] https://nsf-gov-resources.nsf.gov/2023-03/76_fy2024.pdf?VersionId=.4mX0JfKVJ7QhBP.B0DVVg8JzNTGvLAY

[5] https://www.uspto.gov/subscription-center/2023/uspto-announces-semiconductor-technology-pilot-program-support-chips

[6] https://www.nist.gov/chips/frequently-asked-questions-commercial-fabrication-facilities

[7] https://new.nsf.gov/funding/initiatives/pfi