Department of State Allocating $100 Million in FY 2023 for CHIPS Act Projects

The International Technology Security and Innovation Fund (ITSI Fund) appropriated under the CHIPS Act of 2022 provides the Department of State with $500 million ($100 million per year over five years, starting in Fiscal Year 2023).  This funding is available to the Secretary of State to provide for semiconductor supply chain security and international information and communications technology (ICT) security.  In partnership with U.S. interagency stakeholders, the Department has developed a strategic framework for utilizing these funds to advance U.S. national and economic security policy priorities in these sectors.

This funding supports the following programs under these two sectors.

Semiconductors

The U.S. government recognizes that U.S. leadership and strong international cooperation are critical to maintaining a stable, reliable supply chain for semiconductors.  To ensure a more diverse, resilient, and secure global semiconductor supply chain, ITSI funding will support the following efforts:

• Securing Critical Material Inputs. Semiconductor fabricators require access to critical minerals such as aluminum, arsenic, cobalt, copper, and rare earth elements.  Several nations around the world have relevant mineral resources, and the Department will lead an effort to bring new, more diverse and resilient mining, refining/processing, and recycling capacity online to support global chip production, including in the United States.

• Strengthening International Policy Coordination. In conjunction with the Department of Commerce, the State Department will coordinate with partner economies to support a more resilient and diverse semiconductor supply chain.  These activities include developing common or complementary approaches to industry incentives, as well as improving coordination during supply disruptions.

• Expanding and Diversifying Downstream Capacity in the Indo-Pacific and the Americas. The ITSI funding will be deployed to promote the expansion of the international assembly, testing, and packaging capacity needed to diversify the global semiconductor supply chain.  The United States will engage with like-minded partners to identify key regulatory and policy levers to attract semiconductor supply chain investments, identify workforce and infrastructure development needs, and engage in targeted capacity-building to help fill those gaps.  This will also include ensuring countries have the necessary measures in place to safeguard leading-edge chips and technology from diversion and misuse.

• Protecting National Security. Some uses of advanced semiconductors can pose national security risks.  The mechanisms to mitigate those risks – including collaboration with international partners on export controls and licensing policies – require strengthening.  The Department will facilitate the development and close coordination of such policies and practices with supply chain allies and partners.

Secure Information and Communications Technology (ICT)

Under the Digital Connectivity and Cybersecurity Partnership (DCCP) (link: https://www.state.gov/digital-connectivity-and-cybersecurity-partnership/), the U.S. government works with partners and allies around the world help countries harness the benefits of a vibrant digital ecosystem underpinned by secure and trustworthy ICT infrastructure and services.  To advance these efforts, $40.7 million in Fiscal Year 2023 ITSI funding will support the following efforts:

• Developing Enabling Environments for Secure ICT Ecosystems. The Department will provide capacity building training and technical advisory support to raise risk awareness and support the adoption of policy and regulatory frameworks that ensure trust and security are central decision-making factors across the ICT ecosystem.  Programs will also advance policies that promote telecommunications supplier diversity, including through the development and adoption of open and interoperable network architectures.  In addition, funding will train and incubate the next generation of ICT and innovation leaders by connecting partners with U.S. universities and U.S. research institutions to build medium- to long-term capacity and create linkages with U.S. industry.

• Deploying Secure ICT Infrastructure. Meaningful connectivity is critical to enabling countries to take advantage of the incredible economic and social opportunities afforded by a vibrant digital ecosystem.  However, to realize these benefits it is critical that trustworthy vendors build and maintain connectivity infrastructure.  The Department, in collaboration with USAID, the U.S. Trade and Development Agency, the Export-Import Bank and U.S. International Development Finance Corporation, will provide financing, project preparation support, and other investment de-risking support to catalyze private sector investments in secure ICT networks.  In addition, this program will complement the Department of Commerce’s Public Wireless Innovation Fund (link: https://ntia.gov/page/public-wireless-supply-chain-innovation-fund) by engaging with governments and the private sector to support pilot deployments of Open RAN networks to help demonstrate commercial viability.
• Defending Against Malicious Cyber Activity. To maintain healthy and thriving ICT ecosystems, nations need cybersecurity tools, technologies and national incident management capabilities to defend against, manage, respond to, and recover from cybersecurity threats to ICT infrastructure.  The United States will engage with select partners to provide cybersecurity tools and services to better manage cybersecurity threats.

Salaries, Oversight, and Related Expenses

The ITSI fund also includes support for salaries and related expenses for program management staff, including strategic monitoring and evaluation (MEL), and for the Office of the Inspector General to execute audits, inspections, and other projects that focus on oversight of programs related to the CHIPS Act.

For further information, please contact the Bureau of Economic and Business Affairs at [email protected] or visit the ITSI website at:  https://www.state.gov/the-u-s-department-of-state-international-technology-security-and-innovation-fund