This week, the U.S. Department of Commerce announced a non-binding letter of intent between its CHIPS Program Office and USA Rare Earth that could provide up to $1.6 billion in combined funding and loans under the CHIPS and Science Act. The proposed support targets rare earth mining, processing, and magnet manufacturing—inputs that remain critical choke points for advanced semiconductor production.
According to the National Institute of Standards and Technology, the package includes up to $277 million in direct funding and a senior secured loan of up to $1.3 billion. If finalized, the funding would support two projects: USA Rare Earth’s Round Top mine in Texas and an expanded magnet manufacturing facility in Stillwater, Oklahoma.
The Round Top project is expected to begin commercial production in 2028 and is designed to extract roughly 40,000 metric tons per day of rare earth and critical mineral feedstock, with processing capacity of 8,000 metric tons per year. In Oklahoma, USA Rare Earth plans to scale production of neodymium iron boron (NdFeB) magnets to 10,000 metric tons annually—components essential to semiconductor manufacturing tools, electric motors, and defense systems.
Federal officials framed the proposal as a way to reduce U.S. reliance on foreign suppliers for minerals such as yttrium, gallium, dysprosium, and terbium, which are used across semiconductor deposition, doping, and compound materials processes.
Beyond capacity, the announcement signals a shift in how supply chain resilience is being defined. Rather than treating materials sourcing as a downstream issue, the CHIPS program is increasingly targeting vertical integration, pairing extraction, processing, and advanced manufacturing within the U.S.
USA Rare Earth has also signed a separate letter of intent with the U.S. Department of Energy’s National Energy Technology Laboratory to advance heavy rare earth separation technologies, including the use of digital twin modeling—underscoring how data and process control are becoming integral even at the materials layer.
The funding remains subject to further diligence and approvals, and production timelines remain measured in years. Still, the message is clear: securing semiconductor supply chains now depends as much on materials, data, and energy alignment as it does on fab construction.
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