The US Commerce Department has invalidated a $7.4 billion semiconductor research grant overseen by the National Center for the Advancement of Semiconductor Technology (Natcast), claiming that Natcast is an “unaccountable entity” illegally created by former US President Joe Biden.

Established under the CHIPS and Science Act in August 2022, Natcast was responsible for overseeing the National Semiconductor Technology Center (NSTC) – a public-private consortium dedicated to semiconductor research and development in the US.

In comments made by Secretary of Commerce Howard Lutnick, Natcast was described as a “semiconductor slush fund that did nothing but line the pockets of Biden loyalists with American tax dollars.”

The National Institute of Standards and Technology (NIST) will now assume oversight of NSTC.

“The Commerce Department determined that the Biden Administration illegally created Natcast, and therefore the agreement it made in the Administration’s final week granting the organization up to $7.4 billion in taxpayer money is invalid. Thus, the Commerce Department will not abide by its terms,“ the department said in a statement.

It went on to accuse the Biden administration of trying to “skirt clear legal restrictions prohibiting government agencies from establishing corporations” by having “handpicked individuals friendly to the Biden Administration… serve on a ‘Selection Committee’ that, in turn, chose who would form the entity that the Department anticipated would serve as the operator of the NSTC.”

By establishing Natcast in this way, the department claims the Biden administration violated the Government Corporation Control Act, which forbids the government from establishing an entity to act on behalf of an agency unless a specific provision of law permits it to do so.

In a policy memo published by NSTC and Natcast ahead of the Department of Commerce’s announcement, the two bodies said NSTC is “aligned closely with the priorities of the Trump Administration as highlighted in the recently released White House AI Action Plan, its Restoring Gold Standard Science Executive Order, and through high-risk, high-reward, leap-ahead R&D.

“As the Trump Administration moves quickly to ensure US technology dominance, the NSTC is playing a critical role in advancing US leadership in the foundational technologies – semiconductors – that are driving the technological breakthroughs and applications of the future,” the memo said.