US semiconductor policy in limbo as Trump pushes to overturn CHIPS Act

The CHIPS and Science Act, signed by former president Joe Biden in August 2022, was a landmark piece of US semiconductor policy aimed at boosting the country’s semiconductor production and addressing national security concerns

US President Donald Trump has urged his country’s lawmakers to repeal the bipartisan CHIPS Act, which allocated $52.7 billion in subsidies for semiconductor manufacturing. In a recent speech, Trump criticized the legislation, claiming it failed to deliver meaningful results. "The CHIPS Act is a horrible, horrible thing. We give hundreds of billions of dollars and it doesn't mean a thing. They take our money and they don't spend it," Trump stated, adding that any remaining funds should be used to reduce the national debt.

The CHIPS and Science Act, signed by former president Joe Biden in August 2022, was a landmark piece of US semiconductor policy aimed at boosting the country’s semiconductor production and addressing national security concerns. The law allocated $39 billion in direct subsidies for domestic semiconductor manufacturing and components, in addition to $75 billion in government lending authority. The law’s purpose was to strengthen the US semiconductor supply chain, which has been heavily reliant on foreign imports.

Commerce Secretary Gina Raimondo and other officials have praised the initiative, noting its critical role in securing supply chains. However, some members of the Trump administration have questioned the efficacy of the program. Trump's remarks come amid concerns that the Biden administration’s efforts to attract global semiconductor manufacturers to the US could be undermined if the CHIPS Act repeal is enacted.

Debate over CHIPS Act intensifies

Under the Biden administration, the Commerce Department secured commitments from leading global semiconductor firms to establish production facilities in the US. This included large grants to major companies such as South Korea’s Samsung Electronics, Intel, Taiwan Semiconductor Manufacturing Company (TSMC), and Micron, totalling more than $33 billion.

Some local officials have voiced strong opposition to Trump’s stance. New York Governor Kathy Hochul defended the law, saying it played a crucial role in bringing Micron's $100 billion investment and the creation of 50,000 jobs to Central New York.

TSMC, which has committed to building five additional chip factories in the US, recently announced a $100 billion investment plan in collaboration with Trump. Despite this, the Commerce Department recently laid off one-third of its staff overseeing the $39 billion in semiconductor subsidies, signalling ongoing changes under the new administration.

As the debate over the future of the semiconductor manufacturing law intensifies, the semiconductor industry and policymakers await further developments, particularly regarding the potential shift in US semiconductor policy under the Trump administration.

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