Department of Commerce Announces Definitive Agreement with SandboxAQ for a $500 Million CHIPS R&D Award to Accelerate Al-Driven Semiconductor Materials Discovery

The U.S. Department of Commerce has signed a definitive agreement for a $500 million award to SandboxAQ to accelerate AI-driven semiconductor materials discovery. This funding, provided through the CHIPS and Science Act, aims to resolve critical supply chain bottlenecks by developing alternatives to PFAS chemicals and rare earth materials. By leveraging advanced simulations and AI optimization, the initiative seeks to strengthen domestic manufacturing and ensure national security in the microelectronics sector.

The $500 million award, managed by the CHIPS Research & Development Office, focuses on SandboxAQ's AI-driven materials discovery platform. This platform is designed to overcome traditional bottlenecks in semiconductor production by combining first-principles physics and chemistry simulations with AI optimization. The technology enables the high-throughput screening of millions of molecular candidates, which are then subjected to targeted experimental validation to identify the most viable solutions for the industry.

Key priorities for the funding include the development of novel chemistries to replace "forever chemicals" (PFAS), as well as the creation of advanced catalysts and rare earth-free magnets. Additionally, the project will explore new battery chemistries specifically for semiconductor facility backup power systems. SandboxAQ plans to collaborate with American manufacturing partners to transition these breakthrough materials from the discovery phase into full-scale domestic commercialization, thereby reducing reliance on foreign-controlled materials.

Commerce Secretary Howard Lutnick stated that the award reflects a commitment to strengthening the American semiconductor supply chain and reducing reliance on foreign-controlled materials. As part of the definitive agreement, the Department of Commerce will receive a minority, non-controlling equity stake in SandboxAQ, which is intended to enhance the benefit to the U.S. taxpayer. Bill Fraunhofer, Executive Director of Semiconductor Investment and Innovation, noted that this targeted approach addresses critical input constraints that have historically slowed innovation in next-generation computing and AI infrastructure.

The award will advance U.S. economic and national security by accelerating development across four priority programmatic areas: semiconductor manufacturing, advanced computing, AI infrastructure, and secure communications. This investment is part of a broader effort by the CHIPS Research and Development Office to solicit proposals for research, prototyping, and commercial solutions that advance microelectronics technology in the U.S. By investing in AI-enabled materials discovery, the government aims to identify novel chemistries that can improve supply chain resilience and support defense systems.