U.S. Department of Commerce: Takes action against 'unlawfully' established operator of the National Semiconductor Technology Center - statement

U.S. Department of Commerce: Takes action against 'unlawfully' established operator of the National Semiconductor Technology Center - statement

The U.S. Department of Commerce, under the leadership of Secretary Howard Lutnick, has taken significant action against an agreement that was deemed unlawful. The agreement, signed by the Biden administration, allocated $7.4 billion in semiconductor research funding through a nonprofit organization, Natcast, which was staffed by former political appointees [1].

Secretary Lutnick's move comes after a thorough review of the agreement, which was established in January 2025, just days before the Biden administration's departure. The agreement aimed to distribute $11 billion in semiconductor research and development funding, but the Commerce Department found that the arrangement violated federal law. The Government Corporation Control Act (GCCA) prohibits agencies from establishing a corporation to act as an agency without specific authorization, and the agreement in question did not meet these criteria [1].

The Commerce Department's National Semiconductor Technology Center was originally designated to manage the funds, but the Biden administration opted to create an outside entity, Natcast, to administer the funds. This decision was criticized for circumventing the incoming Trump administration's involvement and potentially creating conflicts of interest [1].

Natcast's selection committee included high-profile figures from the Biden administration, such as Jason Matheny and Kendra Wilkerson, who held positions in the White House Office of Science and Technology Policy and other related organizations [1]. This has raised concerns about the impartiality and accountability of the funding process.

Secretary Lutnick's letter to Natcast CEO Deirdre Hanford highlighted the impropriety of the agreement and the need to restore oversight and accountability. The letter also noted that the agreement did not provide for the distribution of funds through an unaccountable, outside entity, which contravened the provisions of the CHIPS Act [1].

The revocation of the agreement aims to ensure efficient use of taxpayer funds and maintain American leadership in the semiconductor industry. The Commerce Department reserves the right to pursue legal remedies against Natcast if necessary [1].

References:

[1] https://nypost.com/2025/08/25/us-news/commerce-secretary-howard-lutnick-voids-illegal-7-4b-agreement-to-pay-biden-staffed-nonprofit-for-semiconductor-research/