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CHIPS and Science Act boosts U.S. technology investment

Agencies including the National Science Foundation will receive a significant increase in funding from the CHIPS and Science Act to research and develop new technologies.

The federal government will funnel billions into science and technology research and development through the CHIPS and Science Act of 2022, and organizations distributing the funds are looking to partner with the private sector.

Although one of the most significant portions of the CHIPS and Science Act of 2022 is the $52 billion allotted to boost semiconductor manufacturing in the U.S., the remaining funds within the entire $280 billion competition package will be doled out to agencies such as the National Science Foundation (NSF), the National Institute of Standards and Technology (NIST), the Department of Commerce and the Department of Energy.

Throughout the competition package, these agencies are charged with working with academia as well as the private sector to raise funds and research and develop new and existing technologies. President Joe Biden is expected to sign the legislation into law this week.

"The truth is, academia alone can't do this, the government alone can't do this, and the private sector alone can't do this," Forrester Research analyst Glenn O'Donnell said. "You have to have that three-way partnership at the center of everything that's coming out of this. And yes, the private sector -- tech companies are going to be a part of that."

Distribution of CHIPS and Science Act funding

If funds are appropriated as authorized in the legislation, NSF will receive a significant $81 billion over the next five years, once Biden signs the bill as expected.

It will use $20 billion of those funds to establish a Directorate for Technology, Innovation and Partnerships (TIP) to rapidly develop technologies such as artificial intelligence, 6G communications and quantum computing.

The new directorate crosses all topic areas, helping more ideas make it across what entrepreneurs call the "valley of death" to deployment, said Margaret Martonosi, assistant director for NSF's Computer and Information Science and Engineering directorate. The "valley of death" refers to the period before a startup business makes any money after it launches a product.

With the additional dollars NSF would receive from the CHIPS and Science Act of 2022, Martonosi said there could be a "richer set of entities" funded by NSF. NSF currently funds 2,000 entities annually -- primarily universities, though it has programs to fund startups as well. NSF receives proposals annually that go through a merit review process before being selected for funding.

The new tech directorate will manage NSF programs related to funding small businesses, as well as "transition to scale" awards that help technologies make it to commercialization, she said. TIP is about "creating a framework that will make it happen more often, more easily and across more topic areas," Martonosi said.

"Every year, we have billions of dollars of highly rated, meritorious proposals that we simply cannot fund because we only have resources for a small fraction of them," she said. "The idea of something like the science part of [the CHIPS and Science Act] is to make more of those ideas couple into the resources they need to actually bring benefits to the nation."

Meanwhile, the Department of Commerce would receive $11 billion over five years to establish regional technology hubs focused on technology development and expanding U.S. innovation capabilities.

NIST would get $9 billion and "more flexibility" to partner with the private sector on critical technology research and development of standards for emerging tech industries, including quantum science information, semiconductors and advanced communications technologies.

The bill also authorizes $40.5 million through 2027 to establish a Foundation for Energy Security and Innovation affiliated with the Department of Energy. The foundation is tasked with working with the private sector to raise funds supporting the "creation, development and commercialization of innovative technologies that address tomorrow's energy challenges," according to a legislative summary.

Oversight of federal funds

The bill implements different oversight measures for distribution of funds.

For example, the bill requires NSF to provide an annual report on the tech directorate's activities and an outline describing how NSF will make future investment decisions.

If at any point this smells like a handout to any of these tech companies, that's going to be a political firestorm.
Glenn O'DonnellAnalyst, Forrester Research

It also requires establishment of an interagency working group led by the director of the White House Office of Science and Technology Policy (OSTP) to coordinate the spending.

Congress has not approved a new OSTP director since former director Eric Lander resigned earlier this year. Biden has nominated Arati Prabhakar for the role. Prabhakar previously served as NIST director, as well as a company executive and venture capitalist in Silicon Valley, leading research and development projects.

"There has to be some technical leadership involved here too so that whoever is running this program has enough understanding of the technology sector to make sure that these funds are being dispersed properly," O'Donnell said.

He added that government policymakers and leaders overseeing the competition package funds distribution will have to proceed carefully to ensure they're being distributed evenly and appropriately.

"If at any point this smells like a handout to any of these tech companies, that's going to be a political firestorm," O'Donnell said.

Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.

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