Aeluma signs $30m CHIPS Act LOI for non-InP photonics R&D
Aeluma (NASDAQ: ALMU) has signed a letter of intent with the US Department of Commerce's CHIPS Research and Development Office for up to $30 million in proposed funding under the CHIPS and Science Act. The Goleta, California-based semiconductor company will use the money to advance its non-indium-phosphide photonics manufacturing platform, which it positions as a commercially scalable alternative to conventional compound-semiconductor substrates used in high-speed optical components.
The funding, if finalised, will support development of photonic devices including high-speed photodetectors and lasers intended for next-generation AI interconnects, network communications and sensing applications. Aeluma's platform enables the production of photonic components on large-diameter substrates up to 300mm, using mainstream microelectronics manufacturing lines rather than the smaller, more costly indium-phosphide wafers that have historically constrained supply.
The deal
Jonathan Klamkin, Aeluma's president and chief executive, said the award aims to accelerate commercialisation of the company's semiconductor platform, citing "growing demand for photonics in AI and advanced computing infrastructure." The release notes that the LOI is not a binding commitment: the final award remains subject to government due diligence, internal approvals and execution of definitive documents. A portion of the funding would be disbursed upfront, with the remainder tied to milestone-based technical progress. Notably, Aeluma would issue equity securities to the Department of Commerce with an aggregate value equal to the award amount, introducing a direct government equity stake in the company.
The company has a history of losses and limited commercial revenue, as disclosed in its SEC filings, making the CHIPS grant pathway strategically significant for its near-term cash position and manufacturing scale-up plans.
Market context
Indium phosphide has long been the substrate of choice for photonic integrated circuits used in datacentre optical transceivers and coherent communications, but the material carries well-documented supply-chain risks. IQ-P substrates are predominantly produced in China and Japan, and export-control measures, as well as geopolitical tension over critical minerals, have focused US government attention on domestic alternatives. Aeluma's approach of growing III-V compound semiconductors on larger silicon or germanium substrates directly addresses those concerns, and similar substrate-migration strategies are being pursued by a number of well-funded photonics startups and established foundries.
The broader photonics-for-AI opportunity is substantial. As GPU clusters scale to hundreds of thousands of accelerators, electrical interconnects hit bandwidth and power-consumption walls; silicon photonics and compound-semiconductor optical engines are the primary candidates to replace copper at rack-to-rack and die-to-die distances. Aeluma competes in this space alongside silicon-photonics specialists and vertically integrated players, several of which have also received CHIPS Act designations or direct-funding awards in earlier tranches.
Regulatory and policy read-across
The CHIPS and Science Act, signed in 2022, allocates $52 billion for domestic semiconductor manufacturing and R&D. The CHIPS R&D Office sits within the National Institute of Standards and Technology and administers R&D incentive programmes separately from the larger fabrication facility grants handled by the CHIPS Programme Office. LOIs at this stage are common and do not guarantee a final award; a number of earlier LOI recipients have seen awards revised or withdrawn during due diligence.
US export controls administered by the Bureau of Industry and Security remain tightly focused on advanced logic chips, but photonic components for high-bandwidth optical interconnects are increasingly viewed through a national-security lens, particularly given their role in AI training infrastructure. Aeluma's emphasis on domestic manufacturing and supply-chain resilience aligns with stated CHIPS Act objectives and may help the company secure additional government contracts as AI compute demand continues to grow.