Head of the US-funded CHIPS and Science Act Center dedicated to digital twins For chip production informed its 121 members that US Department of Commerce will terminate a five-year contract worth US$285 million.
According to his website, SMART Institute USA aims to bring together academic and industrial laboratories to create “virtual manufacturing replicas” that reduce development and manufacturing costs by more than 35 percent, reduce manufacturing development time by 30 percent, and increase manufacturing productivity by 40 percent. There were also plans to train 110,000 workers over five years. This is the second Chips law the appropriate institution that will defunded federal government since the second The Trump administration began in January 2025.
SMART stands for Semiconductor Manufacturing and Advanced Research with Twins, and the organization got its start when it won a government contract in January 2025. It has a complex structure. The organization is headquartered in Raleigh, North Carolina, and is part of a network of federally funded manufacturing innovation institutes called Made in USAwhich preceded the CHIP Act. SMART is a public-private partnership managed by SRC Manufacturing Consortium Corporation, which is a wholly owned subsidiary of Semiconductor Research Corporation (SRC). Founded in 1982 with the support of semiconductor industryThe SRC funds research and development at universities and sponsors over 15,000 students.
According to a Dec. 12 email sent to SMART USA members and received by IEEE spectrumCommerce notified the organization of the termination on Dec. 10. The funds were withdrawn”for convenience“an option that allows the government to unilaterally withdraw from an agreement that is written into many federal contracts,” the email said. Requests for comment from the Commerce Department were not returned by press time.
“Although the DOC recognized that we had built an effective organization and achieved all targets, the administration decided not to support R&D and personnel development in this direction,” Todd YounkinSMART USA executive director and SRC CEO wrote in an email.
What's next?
Details about what will happen next are still emerging, but Younkin wrote that the organization will hold a Q&A. webinars on Wednesday, December 17th to answer questions from members.
“While this is a setback, it does not diminish the importance of the work or the strength of our shared commitment to advancing leadership in microelectronics and improved packaging,” he wrote in an email, adding that the SRC will continue to fund research through its other programs.
In response to IEEE spectrumWhen asked, Younkin's office confirmed the email was genuine.
Younkin confirmed that SMART USA had achieved its performance goals and that the organization's performance was not the reason for the move. The organization added that it is “coordinating a responsible transition with [the Commerce Department] and members.”
Regarding the SRC, Younkin said, “While this transition is challenging, it does not define our future. We have united the semiconductor community for decades and will continue to do so. The SRC will continue to drive industry innovation by fostering strong ecosystems and collaboration. This includes empowering the next generation of semiconductor professionals to enable the next era of computing and communications. Together, we will turn this moment into momentum.”
In the statement David N. HenshallSMART USA's chief operating officer and senior vice president of SRC, said, “Decisions about federal contracts change over time, and 'termination for convenience' is an established mechanism in these agreements and is not a reflection of the significant work we have done. What is clear is the ongoing needs of the industry: challenges in microelectronics and improved packaging remain, and SRC programs provide a strong path forward for collaborative R&D and talent.”
“NIST has a reputation as a neutral and steadfast partner that can work with any industry and academic organization. This reputation is at great risk.”— Zoe Lofgren and Haley Stevens, House Committee on Science, Space and Technology
According to an academic participant who wished to remain anonymous, the addition of SMART USA to the SRC portfolio resulted in some disruptions. This scientist's three-year, $450,000 proposal was accepted for funding in 2025, 2026, and 2027. SRC Global Research Collaboration program. But in early 2025, the second and third years of the grant were canceled and the scientist was invited to apply to SMART USA instead.
The new program required expanding the scope of the project, increasing the number of academic participants, and attracting participation and funding from SMART USA members. He teamed up with researchers from eight other universities and a chip manufacturing equipment firm, then spent the summer putting together a new proposal and trying to get SMART USA industry representatives on board. By August, “we couldn't get enough financial commitment from SMART USA members to even submit an application,” he said, adding that many of the SRC member companies the group worked with had not joined SMART USA by the time the application was submitted, and those that did seemed to be putting very little money into the effort.
Commerce vs. Chips Law
The withdrawal of SMART USA funding echoes an earlier move that removed $7.4 billion from Natcast, the public-private partnership created to operate the National Semiconductor Technology Center, the main research project of the CHIPS Act.
However, the two events differ sharply in tone and publicity. Commerce officials have yet to make a public statement about SMART USA. But in public letter In announcing the withdrawal of funds from Natcast, Commerce Secretary Howard Lutnick hinted at violation of rules on the part of the organization, its CEO –IEEE Frederick Philips Award winner Deirdre Hanford and other experts involved in its creation. A few weeks later Natcast was forced fire most of your staff and has now curled up.
IN letter to Craig BurkhardtActing Under Secretary of Commerce for Standards and Technology, on December 17, two members of the House Science, Space and Technology Committee questioned the decision to end funding for SMART USA.
California Democrat Zoe Lofgren and Michigan Democrat Hayley Stevens “call into question the Department's recent decisions to halt or delay congressionally mandated semiconductor research and development (R&D) programs and awards and violate existing commitments to industry and academia.”
Lawmakers are concerned the moves will cause long-term harm to the economy. National Institute of Science and Technology (NIST), the commerce agency that implements the CHIPS Act. “NIST has a reputation as a neutral and sustainable partner that can work with any industry and academic organization,” they write. “That reputation is at great risk. Few companies would willingly seek a partnership with an organization that reneges on its commitments on a whim.”
The letter went on to criticize NIST. collection of R&D proposals made in September after the destruction of Natcast. “It appears that NIST has turned its model into an investment accelerator or venture capital fund that funds riskier research in exchange for intellectual property “While there is a time and place for the venture capital model, particularly in the private sector, dedicating the entire CHIPS research and development program to it would certainly not be consistent with the clear text and intent of the CHIPS Act.”
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