U.S. government reportedly denies $4 billion grant for Applied Materials

Applied Materials was denied funding from the U.S. CHIPS & Science Act for its proposed $4 billion research and development center in Sunnyvale, California, reports Bloomberg . This decision is significant setback to the company's efforts to establish a major facility in Silicon Valley.

Applied Materials had been promoting this project for over a year, hoping to secure U.S. government support to build a large-scale R&D center that would develop next-generation chipmaking tools. The rejection came from the U.S. Commerce Department, which concluded that the project did not meet the necessary criteria for the funding program designed for large manufacturing projects. The Bloomberg report does not specify why Applied's project does not meet U.S. government's criteria for support; the Commerce Department didn't comment to the publication with any specificity. This could mean that makers of wafer fab equipment will unlikely get support under the CHIPS Act in general, the Bloomberg report suggests.

Originally, Applied Materials had intended to seek funding through a separate initiative focused on commercial research and development facilities. However, this program was abandoned after disagreements within Congress and the administration over a separate focus on military chip technology. Yet, the Commerce Department has indicated that the commercial R&D initiative could be revived if additional funding becomes available. But then, efforts to increase the CHIPS Act grant program by $3 billion have stalled in Congress, casting doubt on the availability of further funding.

There is also a separate $11 billion fund under the CHIPS Act dedicated to research and development in the semiconductor field. The Commerce Department has been working on this initiative, hosting summits and opening applications with the first awards expected in the fall. It is unclear whether the government can fund Applied under this program.

The report says that despite many efforts conducted by the U.S. government, there are concerns about the strategic direction and leadership within the Commerce Department's R&D office. The office has faced criticism for a lack of clear strategy and has been without a designated director since December, when Lora Weiss left the position.

In addition to funding, the Commerce Department is planning to establish government-backed entities for things like prototyping and advanced chip packaging.