US awards $500 million to SandboxAQ for chipmaking materials research
By Cygnus | 17 Jun 2026
Summary
The U.S. government has awarded $500 million to Nvidia-backed startup SandboxAQ to develop new chemicals and materials for domestic semiconductor manufacturing. The initiative aims to reduce reliance on foreign supply chains by finding alternatives to PFAS chemicals, rare earth materials and other critical inputs used in chip production.
SAN FRANCISCO, June 17, 2026 — The U.S. government has awarded $500 million to artificial intelligence startup SandboxAQ to develop new chemicals and materials for domestic semiconductor manufacturing, as Washington seeks to strengthen U.S. chip supply chains and reduce dependence on foreign sources.
The award, announced by the U.S. Department of Commerce, is part of ongoing efforts under the CHIPS Act to support semiconductor research and development. SandboxAQ, which is backed by Nvidia and was spun out of Alphabet’s Google, was valued at $5.75 billion in 2025.
Unlike conventional generative AI systems trained on text and code, SandboxAQ develops physics-based artificial intelligence models that use scientific and experimental data to help researchers solve complex problems in fields such as biotechnology, navigation and materials science.
Under the agreement, SandboxAQ will focus on developing commercially viable materials in four key areas of semiconductor manufacturing:
PFAS alternatives: Developing substitutes for PFAS, or “forever chemicals,” that are widely used in chip production but raise environmental concerns.
Catalysts: Creating more efficient catalysts that can accelerate chemical reactions used in semiconductor manufacturing processes.
Rare earth-free magnets: Developing permanent magnets for chipmaking equipment that do not rely on rare earth materials sourced from foreign supply chains.
Battery systems: Designing battery technologies for semiconductor manufacturing equipment that reduce dependence on critical minerals from overseas suppliers.
The Commerce Department will receive a minority, non-voting stake in SandboxAQ as part of the award. Chief Executive Jack Hidary said the government stake does not include voting rights or board representation.
SandboxAQ also plans to work with industrial partners to commercialize any successful materials developed through the program. If those technologies are licensed for commercial production, the Commerce Department will receive royalty payments under the agreement.
A major focus of the initiative is reducing reliance on PFAS chemicals, which are valued for their performance in semiconductor manufacturing but can persist in the environment for long periods. SandboxAQ said its research will explore both replacement materials and methods to break down PFAS where substitutes are not feasible.
The award also supports broader U.S. efforts to secure supplies of critical materials used in semiconductor manufacturing equipment, including magnets and battery systems that are essential for maintaining reliable fab operations.
Why this matters
- Strengthening semiconductor supply chains: The funding supports efforts to reduce U.S. dependence on foreign suppliers of critical materials used in chip manufacturing.
- Expanding AI into materials science: The project highlights growing use of physics-based AI models to accelerate scientific discovery and industrial research.
- Addressing PFAS concerns: Developing alternatives to PFAS could help semiconductor manufacturers meet stricter environmental standards in the future.
- Supporting domestic manufacturing: New materials and technologies could improve the resilience of U.S.-based semiconductor production and equipment supply chains.
FAQs
Q1: What is the purpose of the $500 million award to SandboxAQ?
The funding will support research into new chemicals and materials for semiconductor manufacturing, including alternatives to PFAS chemicals and rare earth-dependent components.
Q2: What areas of chipmaking materials will SandboxAQ focus on?
The company will work on PFAS alternatives, catalysts, rare earth-free magnets and battery systems used in semiconductor manufacturing.
Q3: What makes SandboxAQ’s AI different from traditional AI models?
SandboxAQ’s systems are trained using scientific and experimental data rather than text and code, enabling them to model physical and chemical processes.
Q4: Will the U.S. government own part of SandboxAQ?
Yes. The Commerce Department will receive a minority, non-voting stake in the company, without board representation.
Q5: Who backs SandboxAQ?
SandboxAQ was spun out of Alphabet’s Google and counts Nvidia among its investors. The company was valued at $5.75 billion in 2025.