Commerce Secretary Withdraws Support for Outside Entity Handling Semiconductor Funds

The Commerce Department has officially canceled a Biden administration agreement to allocate billions of dollars for semiconductor research via a nonprofit organization staffed largely by former political appointees. This decision follows concerns raised about the setup and management of the funds outside the department.

The 2022 CHIPS and Science Act authorized $11 billion for semiconductor R&D, with funds to be distributed through the National Semiconductor Technology Center. However, critics argue that instead of managing these funds inside the department, officials created an independent entity called Natcast to oversee the allocations.

In a detailed letter, Lutnick criticized the administration for establishing Natcast, describing it as an “unaccountable outside entity” that effectively bypassed the department. He emphasized that the creation of such a nonprofit, staffed with Biden White House alumni, was not authorized by law and could violate federal statutes, notably the Government Corporation Control Act.

Alarmed by the management, ongoing reviews by the Justice and Commerce Departments are examining the situation. The funding arrangement was supposed to last until 2034, but recent developments have prompted the administration to end this setup and reassert direct oversight.

Several Natcast executives previously worked closely with the Biden administration, including Donna Dubinsky, a former senior counselor to a former Commerce Secretary, and Susan Feindt, now a senior vice president at Natcast. Jeremy Licht, previously a Chief Counsel at the Commerce Department, also holds a legal position with Natcast.

Critics, including former EPA officials, have highlighted issues with oversight, noting that passing funds through multiple organizations dilutes federal control and increases risks of conflicts of interest. The Biden Department of Commerce aims to restore proper governance and accountability, asserting that legal action may follow if violations are confirmed.