The US government has just become a shareholder in an AI startup, in exchange for a bet that artificial intelligence can break China’s hold on the materials inside every chip factory.
The Department of Commerce has awarded SandboxAQ $500mn under the CHIPS Act to develop new chemicals and metals for domestic semiconductor manufacturing, Reuters reported. In return, Commerce takes a minority, non-voting equity stake in the company, and royalties if the work pays off.
SandboxAQ, backed by Nvidia and valued at $5.75bn last year, will target four materials where US chipmaking leans on foreign supply: “forever chemical” PFAS substitutes, catalysts, magnets that avoid Chinese rare earths, and batteries that avoid imported lithium.
Government as venture investor
The structure is the story. This is not a simple grant. By taking equity and a cut of future royalties, Washington is behaving like a venture fund, the same model it used in a recent $2bn quantum-computing award.
