A key U.S. project aimed at using digital twins to speed design and manufacturing in the semiconductor industry just lost its federal funding, raising questions about the future of virtual innovation tools for chips, tells IEEE Spectrum. The SMART USA Institute, backed by roughly $285 million under the CHIPS and Science Act, was created to develop “virtual manufacturing replicas” of fabs that could reduce development costs and cycle times, improve yields, and train tens of thousands of workers. It brought together industry and academic partners to advance digital twins for chip design, advanced packaging, assembly, and test processes.
Despite meeting its performance goals, the U.S. Department of Commerce invoked a standard contractual clause called “termination for convenience” to withdraw the five-year contract supporting SMART USA. That means the department can end the agreement without cause, but it also leaves the institute scrambling to manage the transition and reassure its 121 members—universities, suppliers, and researchers—about what comes next. SMART leaders say the work remains important and that related research and training will continue through programs run by the Semiconductor Research Corporation’s broader portfolio.
The broader context matters: the CHIPS Act originally funded multiple semiconductor R&D initiatives, including digital twin work under Manufacturing USA. Digital twins are detailed virtual models that mimic physical systems, allowing engineers to simulate and optimize processes before touching real equipment, potentially shortening development cycles and cutting costs. They also support collaborative R&D and workforce training across distributed teams.
Lawmakers from both sides of the aisle have criticized the withdrawal, warning that repeatedly cutting promised funding for semiconductor innovation erodes trust with industry and academic partners and could dampen future collaboration. It follows a similar defunding of other CHIPS-backed efforts and highlights political and budgetary uncertainty around sustaining long-term high-tech research programs.