The U.S. Department of Commerce has restarted the CHIPS and Science Act funding with SandboxAQ and Coherent being the latest vendors getting investment for domestic semiconductor manufacturing expansion.
The move comes after the DoC announced in May of 2026, nine letters of intent totaling $2.013 billion in CHIPS Act funding for quantum computing companies and chipmakers making the U.S. government a quantum VC vendor.
SandboxAQ signed a definitive agreement with the DoC for $500 million to accelerate the development and deployment of AI-driven materials discovery platform to address chip materials bottlenecks and supply chain risks. This will include developing:
- New molecules and chemistries for alternatives to “forever chemicals”
- Advanced catalysts
- Rare Earth-free magnets
- Novel battery chemistries for chip facility backup power systems
The goal of the CHIPS Act is to advance U.S. economic and national security supply chain development across five priorities: Semiconductor manufacturing; advanced computing; AI infrastructure, secure communications; and defense systems.
Meanwhile, Coherent Corp. signed a letter of intent with the DoC to provide up to $50 million in direct funding to expand its facility in Sherman, Texas. A fab that is billed as the first and largest high-volume 150 mm indium phosphide (InP) semiconductor manufacturing facility.
InP-based photonics allow high-speed optical interconnects that move data between processors, memory and systems inside AI data centers. InP is billed as a way to overcome bottlenecks in moving data in these hyperscale facilities enabling higher-performance and more energy-efficient computing architectures.
The facility expansion will add wafer fabrication equipment and clean room capacity to increase production of InP-based photonic devices at scale. The funding will also help to create manufacturing jobs in Sherman and bolster domestic supply chain for photonics.
“Indium phosphide photonics are essential for enabling high speed data transmission within AI systems, telecommunications, and advanced networks,” said Bill Frauenhofer, executive director for Semiconductor Investment and Innovation at the Department of Commerce. “The CHIPS incentives will expand production capability, strengthen the U.S. semiconductor supply chain, and accelerate the next generation of critical optical technologies.”
The Semiconductor Industry Association (SIA), a trade organization that works with governments and companies on semiconductor policy, applauded the Coherent investment as a path toward strengthening the chip supply chain.
“As AI adoption accelerates, demand for advanced optical technologies is growing rapidly. Expanding domestic production of indium phosphide devices will help bolster supply chain resilience, support innovation, and ensure the United States remains at the forefront of critical semiconductor technologies,” said John Neuffer, president and CEO at SIA.
