CHIPS Act Funding a Bright Spot for Manufacturers

A discussion on the collaborative efforts to obtain a portion of the $53 billion federal pie.

By Larry Feld, Contributing Writer On Jun 7, 2024

Peter C. Connolly, CEO of the New Jersey Manufacturing Extension Program (NJMEP), distinctly remembers when former Gov. Chris Christie declared that manufacturing was dead in New Jersey.

Today, Connolly firmly says: “It is not.” 

Not only is advanced manufacturing alive and well in New Jersey, but the New Jersey Economic Development Authority (NJEDA) is masterminding a well-coordinated plan for grabbing some of the billions of dollars in Federal CHIPS Act funding, which promises to deliver even greater growth in the sector.

Back in August of 2022, President Joe Biden signed into law the Chips and Science Act (CHIPS), providing up to $53 billion of direct Federal investment opportunity for the semiconductor industry. Two years hence, the time has come for states to apply for these grant funds.

“Manufacturing is overlooked in New Jersey,” notes New Jersey Business & Industry Association (NJBIA) President and CEO Michele Siekerka, Esq. “We have more than 11,000 manufacturing firms employing almost 325,000 people all across the state. Many are small, efficient operations that might be right in your backyard,” she continues, “and that is what is so exciting about the CHIPS opportunity. We have the assets. We have the workforce. We have the facilities, and we have the clout. No doubt we have the gravitas, so there is no reason why we shouldn’t get our fair share.”

NJMEP and the NJBIA are part of a collaboration that includes more than 100 businesses, institutions, and defense installations across New Jersey that are working together with the NJEDA to help secure funding for the state.

“New Jersey doesn’t get our fair share of the Federal pie,” notes Siekerka. “We are a donor state; we usually send more money to Washington, D.C. than we get back.” However, the NJBIA president feels the CHIPS Act is an excellent opportunity for New Jersey to claw back some of those tax dollars to help grow our advanced manufacturing industry. 

“New Jersey isn’t a huge chips fabrication state,” notes John Kennedy, Ph.D., senior advisor for the NJEDA. “However, when you talk about semiconductor chips, you’re talking about all the processes in the whole supply chain. It’s the design, the materials that go into chips, and the fabrication or what they call foundries. We have more than 400 companies in New Jersey that work specifically within the chips industry, including in chemicals, packaging, and design.”

“We are also the fifth largest chemical manufacturing state in the country, and the high-end design coming out of our companies and universities is nothing short of trendsetting,” Kennedy explains.

Kennedy recently retired after 12 years as CEO of NJMEP. Now working as a consultant, he is part of a small team at the NJEDA that is spearheading the CHIPS Act proposal.

States have three different opportunities to apply for a share of this funding. The Federal Government has created three Notice of Funding Opportunity (NOFO) groups to facilitate proposals from the states. Each NOFO will focus on a unique aspect of the semiconductor industry. The first NOFO only accepts proposals on chips and wafer manufacturing. The second group only considers applications from manufacturing equipment and materials facilities. The third NOFO seeks proposals that focus on R&D, workforce development, and economic security. 

The NJDEA has decided that the third NOFO represents the best opportunity for New Jersey.

It was an informed decision. After a careful strategic review of the state’s research and development assets, as well as its manufacturing, defense, and university capabilities, Kennedy’s team decided to narrow New Jersey’s proposal, focusing predominantly (but not entirely) on funding advanced manufacturing projects involving the defense sector.

“We said, okay, we’ve got university and industry partners, but what sets us apart is our broad defense assets. No other state has a Picatinny Arsenal. However, New Jersey also has joint bases with the Navy, Air Force, and Army, as well as the Coast Guard here. So, we drape across the whole defense capability. Plus, we have the FAA Tech Center,” Kennedy continues.

A Different Approach

Unlike other states, New Jersey has not, in the past, leveraged the power of collaborative thinking when it comes to securing Federal grant funding for industry development. “We end up having two or three proposals from New Jersey, and effectively we compete with ourselves for the same money,” explains NJMEP’s Connolly. 

“They’re not giving each state a billion dollars, right?” explains NJEDA’s Kennedy. “You’ve got to compete for it. So, we’re learning how to compete better for this and not compete against ourselves.”

The NJEDA has assembled a consortium of educational institutions and relevant industry partners, as well as government resources and nonprofits. It meets remotely every few weeks to discuss various aspects of the CHIPS proposal and keeps everyone informed.

“We’re trying to change things,” notes Kennedy, referring to the approach. “We’re communicating with the governor’s office, legislators, and the federal delegation so that we can make them aware. Plus, we’re engaging with NJBIA and NJMEP for their supply chain connections.”

Kennedy says that CHIPS dollars could translate into jobs as early as 2026. “If we are successful with funding our dual foundry model, we [think], within the first two years, that there could be an increase of about 2,500 well-paying jobs,” he concludes.

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