GAO: Commerce Lags on CHIPS Act R&D, $7.8 Billion in Awards Canceled

The Commerce Department has kept the CHIPS Act’s manufacturing subsidy program moving, but the U.S. chip law’s research arm is now behind schedule and still lacks a detailed roadmap, according to a new Government Accountability Office audit released Wednesday.

In report GAO-26-109121, dated Aug. 6, 2026, the congressional watchdog said Commerce “significantly revised its approach” to semiconductor research and development activities but “did not have a plan or timeline” to fully meet statutory requirements for three core programs. The gap follows the cancellation of awards representing about $7.8 billion of the $11 billion Congress appropriated for CHIPS R&D. After those cancellations, Commerce had spent $506.8 million — about 5% of the total — and that figure included $64.1 million in administrative closeout costs tied to a canceled award. GAO warned that without a detailed plan, Commerce could miss chances to advance U.S. chip technology and potentially “leave the U.S. reliant on other countries.”

That stands in contrast to the manufacturing side of the CHIPS program, which Commerce has continued to advance. GAO said that since July 2025, the department awarded nine new projects, bringing the total to 49 projects across 24 companies. As of April 2026, Commerce had disbursed $13.1 billion to manufacturing awardees, about 42% of the program’s direct funding. GAO found manufacturing awardees had completed required milestones by their due dates, although some milestones were behind anticipated schedules.

The biggest turning point in the R&D reset was the cancellation of the Natcast award in August 2025. Natcast had been set up to help stand up the National Semiconductor Technology Center, or NSTC, a flagship CHIPS research initiative intended to support semiconductor research, development and prototyping. GAO said Commerce canceled the award after receiving a Justice Department Office of Legal Counsel opinion dated Sept. 2, 2025, concluding that “The creation of Natcast violates the Government Corporation Control Act.” According to GAO, Natcast then laid off employees and ceased operations in September 2025. The watchdog also said that of the $506.8 million Commerce had spent from the R&D appropriation, only about $16.1 million represented actual disbursements to R&D awardees.

GAO said Commerce’s revised approach still does not adequately map out how it will satisfy requirements for the NSTC, the National Advanced Packaging Manufacturing Program, known as NAPMP, and the Industrial Advisory Committee. Advanced packaging refers to techniques for connecting and assembling chips in ways that improve performance and efficiency, an area the CHIPS law treated as strategically important. GAO said Commerce’s plan to reestablish the NSTC is not sufficiently detailed to show how it will meet statutory requirements. It also said Commerce canceled or paused NAPMP awards and had not renewed the charter for the Industrial Advisory Committee, which the National Institute of Standards and Technology’s public CHIPS page says is “currently inactive.”

GAO made three recommendations, all aimed at forcing more structure into the delayed R&D effort. It said Commerce should, within one year of the report date, develop detailed plans and timelines for the NSTC, for implementing NAPMP requirements, and for reestablishing the Industrial Advisory Committee in line with the law. “Commerce agreed with the recommendations,” GAO said.

The distinction matters because the CHIPS framework was designed to do more than subsidize factory construction. Congress set aside $39 billion for semiconductor manufacturing incentives and $11 billion for semiconductor R&D under the CHIPS and Science Act of 2022 and earlier legislation. The research side — especially the NSTC and advanced packaging program — was intended to build long-term U.S. capacity in chip technology, an area central to electronics, vehicles, defense systems and other industries. GAO’s new finding is that while the factory incentive program is still progressing, the law’s R&D backbone remains only partially rebuilt and not yet fully mapped out.