Trump-appointed Commerce Secretary pulls funding for Biden-era chip research initiative

Commerce Secretary Howard Lutnick has pulled funding from a massive semiconductor chip research effort, leaving hundreds without jobs and billions in promised investments hanging in the balance.

The organization at the center of the controversy, Natcast, had secured contracts worth $7.4 billion to establish America’s National Semiconductor Technology Center. More than 200 major companies including Nvidia, Intel, Apple, Samsung, Google and AMD had joined the initiative aimed at keeping the United States ahead in the global chip technology race.

Lutnick called Natcast a “semiconductor slush fund that did nothing but line the pockets of Biden loyalists with American tax dollars.” He claims the nonprofit was set up illegally by the previous administration and seized control of the money in late August.

The decision hit hard. Natcast employed 110 people. Within weeks of the announcement, more than 90% lost their jobs. A planned September conference in Austin featuring speakers from Nvidia and OpenAI was abruptly canceled. Projects across multiple states received orders to stop work immediately.

Politico interviewed over 50 people connected to the situation. Many spoke anonymously, fearing retaliation. They described chaos and confusion following the funding freeze, with desperate attempts to reach Commerce Department officials going nowhere.

Billion-dollar projects left in limbo

Nearly $2 billion had been committed to facilities and programs in Arizona, New York, California and Texas. The biggest awards went to three research centers that had already begun preparations.

Albany Nanotech Complex in upstate New York received $825 million in federal money, matched by $1 billion from the state. The facility held a ribbon-cutting ceremony in July. Partners like IBM, Micron, Applied Materials and Tokyo Electron had lined up $9 billion in commitments. Officials there say the center will move forward, though replacement funding sources remain unclear.

Arizona State University won $1.1 billion for a chip prototyping facility scheduled to open in 2028. The university found out about the cancellation through Lutnick’s letter. Natcast later told ASU it had terminated efforts to secure the site. Arizona Attorney General Kris Mayes said her office is examining whether legal action is warranted.

In California, Natcast had leased space in a Google building in Sunnyvale for offices and shared resources. Governor Gavin Newsom had set aside $25 million to help with construction costs. The state is now holding that money while deciding what to do next.

Companies are too scared to complain

Lawmakers on both sides want to know what happened. Chuck Schumer, Mark Kelly, John Cornyn and others asked the Commerce Department for briefings. Most requests went unanswered.

Commerce says it’ll still spend the money on semiconductor research, just with a clean slate. Paul Dabbar, the deputy secretary, sat down with IBM, AMD, Micron and trade groups. He told them the public-private partnership wasn’t going anywhere.

Nobody’s making noise about this. Firms still need other CHIPS Act money that hasn’t been handed out yet. People in the industry say companies worry that complaining means losing their shot at funding.

“The companies are scared,” someone close to the situation said. “Companies want CHIPS funding, and they’re very afraid that if they speak out, they’ll lose it.”

The Justice Department changed its mind about whether Biden’s team broke the law when they set up Natcast. Now DOJ says the Government Corporation Control Act was violated. People who worked in the previous administration say that’s wrong. They point to the legal reviews and oversight committees they built into the system.

Deirdre Hanford ran Natcast. She worked in semiconductors for 36 years at Synopsys before taking the job. Industry bosses backed her when she got hired in early 2024. Natcast’s board talked about whether to sue Commerce. They didn’t. Nobody wanted that fight.

Natcast put a document on its website showing what it did for 18 months. The message was simple. Someone else should pick this up.

Commerce plans a webinar about how the $7.4 billion gets split up now. Chip companies already pitched their own ideas to officials. Smaller things like the $1.7 million training program at Maricopa Community Colleges? Still on hold. No word on when that changes.

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