Applied Materials reportedly might pull the plug on developing a $4B research and development center in Silicon Valley due to a lack of government funding.

The EPIC Center, a 180K SF R&D facility, was announced last May and aims to cut the time it takes to introduce new semiconductor technologies and boost their success rate.

To fund the center, Applied Materials had planned to invest up to $4B of capital over the next seven years, but it said in its announcement that scale was dependent upon CHIPS Act support.

Last month, the Biden administration announced it wouldn’t fund any more semiconductor R&D facilities with CHIPS Act funding due to overwhelming demand. This means companies that don't make chips, including Applied Materials, are no longer able to receive funding.

Without this funding, Applied Materials may cancel or scale back its development plans, a source told the San Francisco Chronicle. Another source told the publication the Santa Clara-based company is considering changing the location of the facility because of a lack of funding.

In 2022, the state awarded the company a $30M grant in exchange for investing $2B in semiconductor production equipment and creating almost 700 jobs.

The Biden administration’s announcement came after the passage of the fiscal year 2024 appropriations bill, which reallocated $3.5B of the R&D program's funding to the development of facilities for military microchip production.

Still, an $11B investment from The Commerce Department is planned for direct semiconductor production.

The semiconductor program has a higher volume of requests than available funds, The Commerce Department says. Rather than making cuts across the board, which was considered, the department is confident existing projects with secured funding will include R&D, a source told the Chronicle.

Companies with CHIPS-funded projects in the works include Intel, which intends to use its $8.5B grant to build and renovate semiconductor manufacturing facilities in Oregon, Arizona, New Mexico and Ohio. This grant, announced last month, has been the largest in funding so far.

Taiwan Semiconductor Manufacturing Co. won $6.6B in grants and an additional $5B in loans to build manufacturing facilities in Arizona, funding that was announced Monday. Samsung and Micron Technology are expected to be the next recipients of funding.

First-round CHIPS Act funding concluded in February 2023 and gave a total of $39B to Microchip Technology, GlobalFoundries and BAE Systems.