CHIPS Act Broadens Its Reach Into Rare Earths

A new CHIPS Act proposal could fund US rare earth mining to cut reliance on foreign supply chains

26 Jan 2026

A subtle shift is underway in US technology policy, and it starts well before a chip ever reaches a factory floor. Through the CHIPS Program, Washington is looking upstream, toward the raw materials that make modern manufacturing possible.

Rare earths sit at the heart of this rethink. A newly disclosed, non-binding letter of intent outlines as much as $1.6 billion in proposed funding and loans for USA Rare Earth. The deal is far from final, but it signals growing interest in rebuilding domestic capacity for mining and magnet production.

The proposal blends direct funding, a government-backed loan, and the option for the US government to receive company shares. If it moves forward, Washington would gain a long-term stake in the project. The objective is straightforward: cut reliance on foreign suppliers, especially in Asia, and secure a homegrown source of materials that underpin critical industries.

Rare earth elements are essential for high-strength magnets used in semiconductor tools, defense systems, electric vehicles, and clean energy equipment. The CHIPS Act is best known for chip fabrication incentives, but this proposal shows how policymakers are widening the lens. Advanced technology depends on an entire ecosystem, not just fabs and clean rooms.

As chips become more complex, the machines that build them rely on increasingly precise motors, robotics, and power systems. Many of those components depend on rare earth magnets. That growing reliance has pushed raw materials and processing capacity higher on the policy agenda.

Industry analysts see this as an expected evolution of industrial strategy. Building factories is only half the job. Without secure inputs, supply chains remain vulnerable to geopolitical shocks and market swings.

The challenges are real. Rare earth projects demand heavy upfront investment, take years to scale, and must compete with established global producers. Supporters counter that in sectors tied to national security and long-term competitiveness, resilience matters more than short-term cost.

The broader signal is hard to miss. US technology leadership is no longer just about making chips. It is about locking down the materials and industrial foundations that keep innovation moving. If intent turns into action, rare earths could play a starring role in the next chapter of US tech policy.