The US Commerce Department said Thursday it plans to award up to $389 million in research and development funding to four American companies working on power semiconductor devices and critical chip materials, Reuters reported. As a condition of the funding, the government will take minority equity stakes in all four companies, deepening Washington's direct investment in the industries it sees as the backbone of the AI and clean-energy future.
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| A Helion fusion facility. The Washington-based company will receive up to $175 million, the largest of the four proposed awards, to develop high-voltage power semiconductors for fusion power generation. (File photo via Scientific American) |
The announcement marks the latest in a fast-moving series of federal bets on domestic chips. The department said it has awarded 19 research and development grants to semiconductor firms in recent months from a $10 billion R&D fund approved by Congress under the CHIPS and Science Act of 2022. The four new awards take the form of signed letters of intent, an important step toward final funding agreements, according to reports.
Commerce Secretary Howard Lutnick said in a statement that the awards will "accelerate American semiconductor innovation to enhance our domestic energy and power resources."
The Four Awards, Explained
The largest proposed award goes to Helion, a fusion energy company based in Washington state, which will receive up to $175 million to develop high-voltage power semiconductors and advanced energy power modules for fusion power generation.
Fusion power generation replicates the process by which the sun produces energy, using powerful magnetic fields to control reactions that reach millions of degrees. Precisely regulating that kind of power requires semiconductor technology built to handle extreme voltages, and the chips Helion plans to develop will both power and use energy from the magnets driving its fusion generators, according to the Commerce Department.
"Building fusion power plants at scale requires us to accelerate the development of technologies like semiconductors that are critical to making fusion possible," Helion CEO David Kirtley said. The company also plans to raise $50 million in new private investment alongside the federal award.
The second award goes to Commonwealth Fusion Systems of Devens, Massachusetts, which will receive up to $85 million to develop semiconductors for radio-frequency plasma heating, power electronics, fusion diagnostics, and radiation-hardened electronics that can operate inside the harsh environment of a fusion machine. The company said the funding will also help develop semiconductor technologies for robotic maintenance systems.
"These innovations will be a vital part of our global effort to deploy commercial fusion," Commonwealth Fusion Systems CEO Bob Mumgaard said.
Vertical Semiconductor will receive up to $73 million to advance its vertical gallium nitride power semiconductors for use in AI data center racks, the chip technology that controls the flow of electricity inside the power-hungry servers running artificial intelligence workloads.
Sibelco North America will receive up to $56 million to develop next-generation purification for ultra-high-purity quartz, a critical material used throughout the semiconductor manufacturing supply chain.
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| A large data center complex. Vertical Semiconductor will receive up to $73 million to develop gallium nitride power chips for AI data center racks. (File photo) |
Government Stakes in Private Chipmakers
The equity-stake condition sets these awards apart from ordinary grants. The Commerce Department said the US government will receive minority, non-controlling and non-voting equity stakes in the four companies.
The Seoul Economic Daily noted that because the government will take partial stakes, the arrangement goes beyond a simple grant and marks an expansion of direct government investment in advanced industries.
The move fits a broader pattern in Washington. Recent months have seen the Trump administration convert federal chip support into ownership positions in major semiconductor companies, a strategy officials have described as ensuring taxpayers share in the upside of the investments they fund. Critics of industrial policy have raised questions about the government picking winners, while supporters argue that the approach is necessary to compete with heavily subsidized rivals in China and South Korea.
The awards target a choke point in the technology stack: power electronics. While attention in the chip race has focused on processors and AI accelerators, the chips that convert and control electrical power are just as critical. Data centers, electric vehicles, renewable-energy installations, and fusion plants all depend on power semiconductors, and much of that supply chain currently runs through Asia.
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| A researcher holds a semiconductor wafer. Sibelco North America will receive up to $56 million to develop next-generation purification for ultra-high-purity quartz used in semiconductor manufacturing. (File photo) |
The funding underscores how Washington now treats fusion energy and AI infrastructure as part of the same national project. Fusion startups such as Helion and Commonwealth Fusion Systems need massive amounts of specialized power electronics to make their machines commercially viable, and the same advances spill over into the power systems of AI data centers, which are projected to consume a growing share of the nation's electricity.
For the semiconductor industry, the awards signal that the CHIPS and Science Act is entering a new phase. Early rounds of the program focused on getting large chip fabrication plants built on American soil. This wave is aimed further upstream, at the research and materials that determine whether those factories have a technological edge — from gallium nitride chips to the ultra-pure quartz that goes into every wafer.
The inclusion of Sibelco, a materials company rather than a chip designer, reflects a lesson Washington says it learned from recent supply-chain shocks: a chip is only as secure as the materials used to make it. Ultra-high-purity quartz is essential for the crucibles and components used in semiconductor manufacturing, and disruptions in specialty materials have repeatedly rippled through global electronics supply chains.
For energy markets, the fusion angle matters most. Commercial fusion has long been described as perpetually decades away, but the industry has seen a surge of private investment in recent years, with multiple companies targeting grid-connected demonstration plants before 2030. Federal backing for the power electronics those plants will need could lower one of the biggest cost barriers, even if net-energy fusion power remains a years-away prize.
What Happens Next
The letters of intent are not final contracts. The Commerce Department and the four companies will now negotiate final funding agreements, a process that typically involves due diligence, technical milestones, and the terms of the government's equity stakes.
Congress will be watching. The $10 billion CHIPS research fund is finite, and lawmakers from both parties have signaled they want clear metrics on what the money produces. The 19 recent grants and these four new awards will be measured against their ability to create domestic manufacturing capacity and jobs, not just research papers.
For Helion and Commonwealth Fusion Systems, the awards add federal validation to their race to commercialize fusion power, a race also being run by well-funded competitors in China and Europe. For Vertical Semiconductor and Sibelco, the funding targets nearer-term commercial products: the power chips inside AI data center racks and the purified materials inside the fabs that make them.
If the research delivers, the result could be a more American supply chain for the components that control power in everything from AI servers to future fusion plants. If it does not, critics will point to the equity stakes as a reminder that the government took a financial position in the outcome.
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