Dive Brief:
- The U.S. Commerce Department has not completely implemented semiconductor facilities and equipment incentives program requirements under the fiscal year 2021 National Defense Authorization Act, GAO found in a report dated Aug. 6, 2026.
- The agency established advanced microelectronics research and development activities but then representing $7.8 billion of the $11 billion appropriated for them. The DOC also hasn’t met other requirements for promoting chip and microelectronics manufacturing.
- The GAO recommended that the CHIPS for America Research and Development Office create detailed plans for meeting R&D requirements of the FY 2021 NDAA.
Dive Insight:
The GAO’s report comes as the DOC has made an effort to promote semiconductor manufacturing in the U.S. through CHIPS and Science Act awards, funding of new Manufacturing Extension Partnership centers and other initiatives.
According to the GAO, the DOC has disbursed $13.1 billion in CHIPS and Science Act awards for 49 projects across 24 companies that completed project milestones, workforce activities and design activities. The DOC also amended existing awards for 14 companies, with amendments covering issues such as project and workforce activities, milestones and equity or profit-sharing arrangements.
The GAO said that as of April 2026, awardees had completed all required milestones by their due dates but were behind schedule on some others.
Despite some progress, however, the GAO found that the DOC has failed to meet FY 2021 NDAA requirements for promoting chip and microelectronics manufacturing and R&D. Its report is an update of a December 2025 report on the status of financial assistance awards and projects funded under the DOC’s semiconductor incentives program and microelectronics R&D programs.
The FY 2021 NDAA allows Congress to provide financial assistance to entities that make semiconductors and related equipment and meet certain requirements. The bill also permits Congress to establish up to three new Manufacturing USA institutes.
The National Institute of Standards and Technology’s CHIPs Program Office oversees federal semiconductor awards and projects, ensuring that awardees achieve milestones related to construction, equipment installation and other metrics.
Under the FY 2021 NDAA, the DOC must establish a National Semiconductor Technology Center, National Advanced Packaging Manufacturing Program and microelectronics research program. DOC also must set up an Industrial Advisory Committee to help guide the domestic microelectronics industry and facilitate public-private partnerships to advance microelectronics R&D and manufacturing.
However, according to the GAO, the DOC has changed the way it handles advanced microelectronics R&D programs while failing to show how it will comply with NDAA requirements.
For example, it said the DOC:
- Has spent only about 5% of the $11 billion in funds appropriated for advanced microelectronics programs.
- Has failed to make disbursements under two NAPMP awards.
- Awarded a nonprofit $7.4 billion to establish the NSTC, only to cancel that award and recharter the program without describing how the new charter will meet NDAA requirements for the NSTC.
- Terminated an award to operate a new Manufacturing USA institute related to semiconductors.
- Established an Industrial Advisory Committee to provide guidance for advanced manufacturing R&D programs and then failed to renew the committee’s charter.
The GAO said the advanced microelectronics R&D programs and Industrial Advisory Committee established by the NDAA are essential for helping the U.S. semiconductor industry compete globally.
“However, in revising its approach to R&D activities to align with the current administration’s priorities, [the DOC] curtailed extensive efforts it had already begun toward the FY 2021 NDAA requirements and lengthened the time frame for implementation, delaying activities that could help reduce U.S. dependence on foreign suppliers,” the report concluded.
It added that the DOC doesn’t have “specific plans and timelines” for meeting NDAA mandates.
The GAO recommended that the DOC’s CHIPS R&D Office:
- Develop a detailed plan for how and when the NSTC will meet applicable requirements in the FY 2021 NDAA.
- Fully implement NAPMP requirements by making the two existing awards or planning how it will implement NAPMP requirements in the 2021 NDAA if it decides not to make the awards.
- Develop a plan for reestablishing NIST’s Industrial Advisory Committee to align with 2021 NDAA requirements.
