The Commerce Department announced on Thursday, October 22, that it had signed letters of intent for up to $389 million in CHIPS Act research awards. In return, the government would take a minority stake in each company that receives one. The four recipients are Helion, Commonwealth Fusion Systems, Vertical Semiconductor and Sibelco. Two are fusion companies, one is building power chips for AI data centers and one refines quartz for the chip supply chain. None of the money is final yet.
The funding is for research and development, not factory construction. A weekly federal science roundup covering October 18 to 24 notes that this extends CHIPS money beyond chips themselves, into power electronics and materials.
What the CHIPS Act $389 million package funds
The department said it had signed four letters of intent for new awards under the CHIPS and Science Act, according to a Reuters report carried by U.S. News & World Report. Its own announcement on NIST's newsroom describes the package as four R&D awards. The department had already given 19 R&D grants to semiconductor firms from a $10 billion fund that Congress approved in 2022, so this round builds on an existing program.
The breakdown is below.
| Company | Up to | Stated focus |
|---|---|---|
| Helion | $175 million | High-voltage power semiconductors and advanced energy power modules |
| Commonwealth Fusion Systems | $85 million | Semiconductors for radio-frequency plasma heating, power electronics, fusion diagnostics and radiation-hardened electronics |
| Vertical Semiconductor | $73 million | Vertical gallium nitride (GaN) power chips |
| Sibelco | $56 million | Next-generation purification of ultra-high-purity quartz |
Helion takes the largest share. Its money would support work on high-voltage power semiconductors, a category that matters for any system moving large amounts of electricity.
Why Vertical's GaN chips matter to AI data centers
Vertical Semiconductor, an MIT spinout, would receive up to $73 million to advance vertical gallium nitride power chips. The company's stated goal is demonstrating a 2.5 MW rack for AI data centers. Cynthia Liao, the company's CEO and co-founder, put the problem directly: "Power is the most significant bottleneck in the build-out of AI infrastructure," according to Converge Digest.
That framing explains the target. Rack-level power delivery sits close to the servers it feeds, so a more efficient power chip there affects operators long before any fusion plant comes online. The award would fund development, not a production line.
Sibelco would receive up to $56 million for next-generation purification of ultra-high-purity quartz used in the semiconductor supply chain. Quartz gets far less attention than a GaN wafer, but it sits upstream of chipmaking. Washington has also moved to designate helium a critical material as chip supply tightens, as we reported separately.
Why fusion companies are in a semiconductor package
Two of the four recipients are fusion companies, which is the part of the package most likely to draw questions. According to Data Center Dynamics, Commonwealth Fusion Systems' proposed ARC plant is planned at 400 megawatts and is expected to deliver electricity to the grid in the early 2030s. That plant is tied to a long-term power purchase agreement with Google.
The Commerce award itself is different. It pays for semiconductors and electronics inside CFS's machines, not for the plant's power sales. Power electronics, plasma heating controls and radiation-hardened parts all depend on chips, so the case for funding them is straightforward. Whether the "semiconductor" label stretches that far is the argument reporters are already having.
Why Commerce is taking equity along with the grants
Commerce Secretary Howard Lutnick said the investments would expand domestic research, secure critical supply chains and create high-paying American jobs, according to ExecutiveGov. The equity component is the more consequential detail. The department says minority, non-controlling, non-voting stakes are a condition of funding.
The legal footing is thinner than the policy ambition suggests. A Lawfare analysis points out that the Senate never adopted the amendment in question. It also notes that the CHIPS Act does not explicitly prohibit the department from asking for or receiving equity as part of a grant agreement. In practice, that silence gives the department room to write equity into its deals.
For the government, a non-voting stake offers upside without a board seat. For the companies, it brings in an investor that does not run the business but does hold a claim on future value.
How Intel and Quantinuum set the precedent
Intel is the largest example of this model. In August 2025, the government agreed to take a 9.9% stake in the chipmaker, buying 433.3 million shares at $20.47 each for $8.9 billion. According to Intel, that money was largely funded by CHIPS Act grants Intel had already been awarded, a detail The National Telegraph also reports.
Quantinuum is the closer precedent. Its letter of intent from Commerce, dated May 21, 2026, covered up to $100 million, with equity issued to the department, according to its prospectus. The parties signed the agreement on September 4, as disclosed in an SEC 8-K filing. That gap was roughly three and a half months. If the four new letters follow the same path, final agreements are months away.
The difference between Intel and these four firms is visibility. Intel is public, so anyone can check the math on its stake. Helion, Commonwealth Fusion Systems and Vertical are private, so terms such as valuation and warrants may stay out of public view unless the companies or the department disclose them.
What is still unsettled
Several questions remain open, and the announcement leaves most of them unanswered.
- The letters do not state milestone terms or a timeline for definitive agreements.
- Equity size, warrant terms and valuation are not disclosed in the available sources.
- Sibelco still needs due diligence, negotiations and government approvals.
- The count of government stakes is disputed. A commentary in The National Telegraph counts 36 companies, but other tallies differ, so the figure is unverified.
- Critics on the free-market right want the practice to stop, according to the same commentary.
- Reporters are debating whether fusion research belongs under semiconductor policy, as one weekly federal science update notes.
The stake count matters because it shapes how much of federal R&D policy now runs through equity. Without a verified number, it is hard to judge whether this is a pattern or a handful of exceptions.
How to track the final terms
No consumer action is needed, but anyone tracking federal chip policy or the recipient companies can follow a few steps.
- Watch the NIST and Commerce newsrooms for definitive agreements. The letters are not final, and those agreements should contain the milestone and equity terms.
- Check SEC EDGAR whenever a recipient is public. Quantinuum's signed agreement surfaced in an 8-K, while private companies may disclose far less.
- Compare any final deal with the Quantinuum agreement. Look for equity size, warrant terms and milestones, the three details still undisclosed.
The next signal will be the first definitive agreement under this round. Watch whether the department publishes milestone terms, how large each equity stake turns out to be, and whether Vertical reaches its 2.5 MW demonstration. Those answers will show whether this is a one-off or the template for the next round of CHIPS money. For another angle on chip competition, see our report on CXMT's 4F2 memory claim.
