Commerce CHIPS office signs letter of intent with USA Rare Earth to onshore ‘mine-to-magnet’ capability
The Commerce Department’s CHIPS Program Office announced a non-binding letter of intent to support USA Rare Earth with up to $277 million in direct funding and up to $1.3 billion in a senior secured loan. The plan targets a vertically integrated domestic supply chain for critical minerals and neodymium iron boron magnets used across advanced manufacturing, including parts of the semiconductor ecosystem. The proposed funding would support projects in Texas and Oklahoma, with commercial mining targeted for 2028 and expanded magnet output planned in Stillwater, Oklahoma.
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A CHIPS-linked bet on upstream inputs
The Commerce Department’s CHIPS Program Office announced a non-binding letter of intent with USA Rare Earth (USAR) intended to accelerate a U.S.-based, vertically integrated “mine-to-magnet” strategy. While the CHIPS and Science Act is often associated with chip fabrication, the agency framed this support as strengthening the semiconductor ecosystem by securing upstream materials and components that are difficult to source outside China.
Proposed funding and loan details
Commerce said the LOI covers up to $277 million in direct funding and up to $1.3 billion in a senior secured loan, subject to diligence, final terms, and approvals. In conjunction with the proposed support, the government would receive approximately 16.1 million shares and warrants for another 17.6 million shares, reflecting an approach that blends public financing with equity exposure in strategic industrial capacity.
Texas mine and Oklahoma magnet expansion
The proposed support would help fund a mine at Round Top, Texas, and an advanced manufacturing project in Stillwater, Oklahoma, with the company aiming to more than double planned magnet capacity to as much as 10,000 tons per year. Commerce highlighted the role of rare-earth magnets and critical minerals in advanced manufacturing, including foundational semiconductor processes and broader national security applications.
Why this matters for technology supply chains
Rare-earth processing and magnet manufacturing have long been viewed as chokepoints, with significant global capacity concentrated outside the United States. By tying this LOI to CHIPS-era objectives, Commerce is signaling that technology competitiveness depends not just on fabs, but also on materials, specialized components, and resilient industrial inputs. The LOI is not final, but it outlines the government’s direction of travel: move more of the stack onshore, from minerals to manufactured parts.