The US Commerce Department has revoked a $7.4bn semiconductor research grant, originally arranged in the closing days of the Biden administration.

Commerce Secretary Howard Lutnick announced that the National Institute of Standards and Technology (NIST) will now manage the National Semiconductor Technology Center (NSTC). This centre was previously controlled by the National Center for the Advancement of Semiconductor Technology Center (Natcast).

The change stems from assessments that Biden-era officials unlawfully created Natcast to handle NSTC’s operations, bypassing legal restrictions against government agencies forming corporations without explicit legal authorisation. This arrangement was criticised as misusing taxpayer funds, with the Commerce Department labelling Natcast a “semiconductor slush fund.”

In January 2025, just before President Donald Trump’s inauguration, the Biden administration finalised an agreement to appoint Natcast as the NSTC’s operator for ten years. This agreement allocated nearly all of Natcast’s funding through a federal grant of up to $7.4bn.

Established under the CHIPS and Science Act of August 2022, the NSTC aimed to enhance domestic semiconductor research and workforce development. Instead of directly overseeing this initiative, Biden-era officials tasked Natcast, a private non-profit entity, with its management.

The selection process for Natcast’s leadership faced scrutiny due to perceived partiality. A committee appointed by Biden officials selected individuals aligned with the administration to direct Natcast, including Jason Matheny, Don Rosenberg, and Brenda Wilkerson.

Documentation indicates that former Biden administration members significantly influenced Natcast’s organisational setup by offering extensive legal and corporate guidance.

Lutnick said: “From the very beginning Natcast served as a semiconductor slush fund that did nothing but line the pockets of Biden loyalists with American tax dollars.

“The Biden Administration had no authority to manipulate legislation in a way that would allow them to establish, staff, and govern a corporation to act as a government agency.

“Ending this illegal relationship between Natcast and the NSTC will ensure that the Commerce Department keeps control of taxpayer funds and delivers investments and benefits for all Americans.”

The original agreement with Natcast notably excluded a standard “termination for convenience” clause, thereby limiting oversight and adaptability for future administrations. However, this agreement has been deemed void due to violations of the Government Corporation Control Act.