The future of CHIPS: Who are the acquirers in the recent Natcast fire sale?

Background

On August 25, 2025, President Trump’s Commerce Secretary, Howard Lutnick, announced that he was shutting down Natcast, the non-profit organization created to run the CHIPS & Science Act’s National Semiconductor Technology Center. Natcast, spun out over 2+ years with ~$7.4 B promised funding, was abruptly shut down with just two week’s notice.

At the same time, the science side of the CHIPS and Science Act is at risk as Congress as the Trump administration and Congress considers major cuts to agencies such as the National Science Foundation.

Traditionally, when federal programs are sunset, there is significant notice, long wind down periods, and even potentially funding available to ease the transitionary period. In this piece, we explore what happens when high-impact programs with clear momentum (e.g. confirmed industry partnerships, world-class teams, ready business models) are shut down abruptly and must find new homes while identifying alternate funding sources. 

We need a new playbook that is: 

1. Built for speed
2. Stress tests the assumption that other parts of government should always be the acquirer
3. Creates new models for public-private partnership and co-investment 

This piece focuses on the shutdown of Natcast but this playbook can be applied to other government efforts at risk, such as cancer research, vaccines, government digital services, and even government data.  

Lessons Learned

The story behind Natcast, its closure, and what’s likely to happen next are detailed below. We take away three big lessons:

1. When launching industrial policies related to science and research like the CHIPS & Science Act, start the research and development implementation work as soon as possible, even if there is a longer tail on the job creation impact of that work.
2. During moments of political transition, there is risk in getting too deeply involved in  governance and staffing decisions of an independent entity like Natcast.  Good governance and staffing are important to maintain operational continuity and purpose, but too much involvement introduces the risk of choices and people being politicized by future administrations.
3. Build something that private funders would invest in, even if the government pulls its funds early.  Sometimes this will require streamlining the organization’s purpose and strategy to start, even if that short changes your full suite of policy goals.  This is much easier said than done because so much of the early infrastructure and risk needs to be subsidized to make a Natcast style entity attractive enough to complementary investment.  However, we will try to identify in this piece several programs where this strategy is viable and can be supercharged.

The Natcast Crisis + Opportunity

There is consensus in the academic and business community that Natcast, while imperfect, had the potential to help solve major R&D, commercialization, and workforce bottlenecks in the domestic semiconductor industry.  In a best case scenario, it could be the central catalyst for the next generation of the U.S. semiconductor industry, a mix between Bell Labs, IMEC, and Google X for a suite of emerging technologies that are critically important to US national security and global competitiveness.

However, Natcast was not a monolith.  Rather, it was a suite of proposed activities and facilities ranging from: 

• Moonshot research programs and bridge funding to advance technologies benefiting the broader semiconductor ecosystem.
• Design enablement gateway, shared tools and cloud infrastructure to lower the cost and time of chip design.
• Prototyping facilities in New York, California, Arizona, and other states, offering open access to large and small ventures.  A departure from proprietary facilities owned and run by the largest incumbent semiconductor companies and catering to their needs.
• ~$500 million venture fund to invest in promising semiconductor startups.
• All powered by a blend of public and private funding.

Many of these ideas had significant momentum behind them, world-class teams prepared to build them, and millions of dollars already spent to market test these programs with end users. There were hundreds of private sector members already signed up, committing millions of dollars, with state governments in CA, NY, and AZ securing tens of millions more in co-investment. 

What Comes Next?

Today, many of the projects are in purgatory.  However, there are rumblings from private investors, state governments, and even international universities who are exploring acquiring these invaluable innovation-strengthening assets at bargain prices.  Some will bring the teams or technologies in-house, potentially combining the assets with their existing R&D efforts or their portfolio companies.  Others are considering open-sourcing the data and Natcast-created playbooks so that others can build on top of these ideas and technologies.  

There is some precedent for this:

• We have seen the US Digital Service and 18F teams open-source technologies before leaving government and then set up successful non-profit entities and for-profit consulting companies outside of the government.  Venture capitalist, Mark Cuban, even offered to fund this effort.
• Within the Department of Commerce/NIST, the highly successful Advanced Technology Program (ATP) was shut-down in 2017 after playing a fundamental role in the development of the human genome project, speech to text computer programming, and the electric car industry. While there was not a single acquirer, many future government programs, including the proposed Natcast innovation fund, built on the ATP foundation.
• On the data front, there have been several philanthropically funded coordinated efforts to archive data that is in the national interest and could be built upon by the private sector, everything from weather to labor data.  To learn more about the importance of the role that the government plays in creating, open-sourcing, and curating data, read Michael Lewis’s book.

Some technologies and ideas may not be rescued in the fire sale, which reflects three realities since the original conception of Natcast: 

• Some ideas fit into Biden administration priorities and may not make sense given the policy direction and regulatory framework of the new Trump administration
• Government-funded projects can get weighed down as the Department of Commerce and Natcast leadership tried to incorporate the perspectives of a broad constituent base inside the government, on Capitol Hill, and across the large semiconductor companies.
• A prospective buyer may not find all of Natcast’s individual assets to be valuable outside of the original context/portfolio approach.  The market needs to take a clear-eyed look at the remaining assets as stand alone offerings and a portfolio. 

This piece will be an analysis of the most likely acquirers for this treasure trove of assets.  They are ranked by likelihood of acquisition and/or re-imagination in 2026.

1. Design enablement gateway
2. Venture/innovation fund
3. Research funding programs

Design enablement gateway

What it is: The design enablement gateway is an open-source tool that would provide stakeholders—including universities, startups, EDA/tool vendors, and foundries—with cloud-based access to design automation tools, reference flows, shared datasets, and silicon aggregation services to lower the cost and time of advanced chip design.

Why this matters to the market: It is really expensive for startups and universities to buy these tools from closed-source, proprietary vendors like Cadence and Synopsis.  By bulk negotiating and centralizing these resources and services, Natcast was creating economies of scale that allowed startups to build in ways that significantly speed up the time to get from idea to investible prototype. The absence of a design enablement gateway style product means that startup companies will continue burning investor cash on vendor tools and will lead to continued technology lock-in for incumbent players.

Most likely acquirers: 

• A venture fund who sees the value of bringing these services in-house through a merger with an existing portfolio company; this could also be a venture platform offering for the fund’s portfolio companies reducing the burn rate on expensive tools.
• A university consortium with experience developing open-source platforms and industry partnerships.
• State government(s): while the design enablement gateway was intended to be housed within the Silicon Valley based NSTC’s R&D facility, the vision was to create a hub and spoke model where there would be multiple centers across the country.

What happens next:

• The state of California already committed $25 M+ to this initiative but that matching funding is now at risk since the funds were committed specifically to Natcast. The state of California could reallocate the funds to a new non-profit or university (e.g. USC or Stanford), pause them, or return them to the state treasury.

• If CA pauses or returns the funds, a savvy governor or member of Congress from another state could jump at the opportunity to lure this effort to their state as a part of a larger, semiconductor and AI strategy. I think this will probably happen, and the most likely states would be those that have previously announced AI and semiconductor strategies and have flexible business recruitment funds such as:
  • Massachusetts
  • Texas
  • New York
  • Illinois
  • Arizona
  • Oregon

Venture/Innovation Fund

Background: authorizing legislation for the CHIPS and Science Act had a single sentence on the creation of an investment fund:

“Establish an investment fund, in partnership with the private sector, to support startups and collaborations between startups, academia, established companies, and new ventures, with the goal of commercializing innovations that contribute to the domestic semiconductor ecosystem.”

Personal note: I spent a year plus, working with a small team, to develop a strategy to bring this venture fund to life, aiming to develop a fund that would fill critical market gaps and speed the time to market for promising semiconductor technologies.  We interviewed over 150 founders and private investors, benchmarked peer efforts and interviewed everybody from In-Q-Tel to the European Union on what worked and didn’t work with their deep tech investment fund models.  

Based on our conversations and data analysis of every semiconductor deal over a 20 year period, It was clear that this market was not operating efficiently. There was a clear role for a new fund to play with a different mandate than a traditional fund, a fund that could: 

• Make multiple bets in a given technology vertical;
• Provide long-term, founder friendly flexible capital;
• Address the funding bottleneck for high risk projects. We routinely saw companies getting acquired very early by incumbents, locking in the incumbents’ dominant position, or dying on the vine;
• Provide significant value beyond capital, including access to talent, preferred access to prototyping facilities, clean rooms, and shuttle runs, and the ability to co-create with large semiconductor companies through Natcast.

Why this matters to the market: Natcast took many of these ideas forward, recruiting a luminary from the deep tech venture capital field with impeccable private sector credentials to run it. 

Natcast built bipartisan momentum around a new venture fund designed to bridge critical gaps in deep-tech commercialization. The fund, ready to launch with strong private-sector interest, would provide flexible, catalytic capital to U.S. startups beyond chip design, helping sustain national competitiveness as federal R&D budgets tighten.

Most likely acquirers: 

• The Department of Defense or In-Q-Tel, a not-for-profit strategic venture capital firm which supports defense and intelligence priorities. This acquisition would represent a broadening of In-Q-Tel’s historical mandate, which has been centered around the needs of the warfighter.  However, In-Q-Tel is already an active semiconductor investor.
• A venture philanthropist (or multiple) who cares deeply about US technology competitiveness. With its mature business plan and proven team, the innovation fund could achieve market rate returns. However, its ambitious vision requires a longer investment time horizon and higher risk tolerance than the market currently allows, which is why venture philanthropy backing would be additive.
• A deep tech venture fund with a long-time horizon and close ties to universities and  university endowments, such as The Engine out of MIT.

What happens next:

• If the status quo persists, great companies continue to die on the vine or stagnate as the number of semiconductor focused VC funds remains stable or shrinks.
• Alternatively, a group of family offices and/or corporate investors bands together and replaces government CHIPS funds as the limited partner (LP) base for this venture fund.  There is precedent for similar initiatives in the healthcare and biotech space, such as GHIC and Research Bridge Partners. I would recommend that the former Natcast team starts pitching funders, potentially working in partnership with a group like Renaissance Philanthropy that can build a funder table with appropriate risk appetite.

Research funding programs

Background: Natcast intended to do its own original in-house research and fund research at universities, national labs, and within the private sector. One of the key elements of the pitch to corporate members joining Natcast was the ability to help shape and inform the research agenda. Some of this research was going to be funded through competitive requests for proposals (RFPs), other research would be funded through consortium models, and a third bucket of R&D work at Natcast and within Department of Commerce centered around supporting talented in-house experts, entrepreneurially-minded PhD students, and other talent initiatives that spanned universities and non-profit acceleration programs like Activate.

Why this matters to the market: there are tens of millions of dollars in research funding that are unlikely to go out the door as originally planned.  Applicants and universities are left in limbo as research funding writ large is shrinking across the board.

Most likely acquirers:

• Government: Historically, these funds would be re-absorbed by NIST and deployed using traditional in-house review committees and a selection of experts. The Department of Commerce has released a Broad Agency Announcement requesting 5 page proposals for projects of at least $10 M, with limited detail on how projects will be prioritized.¹
  • However, the current Department of Commerce is viewing CHIPS funds with more flexibility than the previous administration. We could envision a scenario where a portion of these funds end up supporting an Intel style deal or the recently proposed equity stakes in quantum companies.  This uncertainty, compounded by a recent government shutdown, has a chilling impact on the semiconductor R&D market with ripple effects across universities, startups, and large corporations who saw real advantages in doing joint, early-stage research.
• US universities have already organized interdisciplinary research groups to tackle these research priorities and see value in continuing that work, either by using internal funds or identifying corporate Natcast partners who would be willing to re-direct the dollars they earmarked for Natcast membership.
  • The challenge is that there will not be the network effects or scale afforded by Natcast’s initial member base.  TSMC, Micron, and others were required to become Natcast members as a condition of their CHIPS CPO incentive deals.  Universities can offer the carrot but lack the stick or imprint of the federal government.
• International universities will likely begin picking off researchers and PhD students in the semiconductor space.  The UK and EU have already begun formal recruitment efforts and several EU nations have significantly increased their budgets for similar R&D initiatives.  China is also looming large as an acquirer in this space, given the likely boomerang effects of immigration policies, HB-1 visas, and their history of snapping up IP legally and illegally.
  • The obvious challenge is that this route will lead to US brain drain and chip away at the notion that the US is the best place to build and scale cutting edge technologies.

Conclusion

The collapse of Natcast shows how fragile America’s deep-tech infrastructure has become.  We need faster, more flexible ways to transition when public R&D and data efforts are cut off mid-stride. Natcast’s assets, talent, and ideas still hold immense value, but they’ll only survive if private investors, states, and universities move quickly to absorb and reimagine them. More broadly, when a $7.4 B national tech initiative dies in two weeks, the US needs a new playbook to keep that innovation alive.

¹ NIST is requesting proposals for projects to be funded using the returned Natcast funding. Language from program staff below: 

Submit a 5-page (and NOT MORE THAN 5 page) white paper -- sooner rather than later -- if you have something you want to propose. Finished is better than perfect, as whitepapers that are close-but-not-quite could receive feedback from the CHIPS R&D office and be resubmitted. It might be uncomfortable to submit before seeing the webinar, but the webinar sticks very close to the text of the BAA. 

Your proposal should be a relatively big idea (BAA minimum is $10M, and there is no maximum). It also should accomplish something concrete and have a solid commercial viability story.