A CHIPS-linked push to secure minerals and magnets
On January 26, 2026, the U.S. Commerce Department’s CHIPS Program Office announced a non-binding letter of intent with USA Rare Earth that could provide up to $277 million in direct funding and up to $1.3 billion in a senior secured loan under the CHIPS and Science Act. The program framed the move as part of a broader effort to strengthen the domestic semiconductor ecosystem by reducing dependence on overseas supply chains for critical inputs.
While the CHIPS Act is often discussed in terms of chip fabrication plants, Commerce officials emphasized that the supply chain for chips depends on specialized materials and components as well. Rare earth elements and certain critical minerals are used in processes and equipment, and rare-earth magnets are essential across advanced manufacturing—especially where high performance and reliability are required.
What the projects would build in Texas and Oklahoma
According to the announcement, the proposed funding would support two projects with an estimated combined capital investment of about $3.3 billion: a mine in Round Top, Texas and an advanced manufacturing project in Stillwater, Oklahoma. The Texas project is described as extracting rare-earth and critical-mineral feedstock, with commercial production expected in 2028, while the Oklahoma facility would expand capacity for neodymium-iron-boron (NdFeB) magnets to up to 10,000 tons per year.
Commerce described USA Rare Earth as pursuing a vertically integrated “mine-to-magnet” strategy—mining, extracting oxides, converting to metals, and producing feedstock and magnets domestically. The stated goal is to remove bottlenecks in U.S. manufacturing that currently rely heavily on foreign processing and magnet production capacity.
Government stake and private capital alongside the LOI
As part of the proposed arrangement, Commerce said it would receive approximately 16.1 million shares and a warrant for an additional 17.6 million shares. The agency also noted that the proposal remains subject to diligence, final agreements and approvals. In parallel, USA Rare Earth said it raised significant private-sector equity financing through a PIPE transaction to support the same buildout.
Why this matters for technology policy
The announcement highlights a policy shift in which tech competitiveness is treated as a full-stack supply problem: not only chips, but also minerals, materials, magnets and manufacturing inputs. For industry, success will depend on whether timelines hold, whether environmental and permitting challenges can be managed, and whether domestic production can meet performance and cost needs compared with established global suppliers.