President Donald Trump has taken aim at one of Joe Biden’s key initiatives, the CHIPS Act, a £41.05 billion ($52.7 billion) program aimed at boosting domestic semiconductor manufacturing. In a recent speech to Congress, Trump criticized the Act as a ‘horrible’ waste of money and called for its immediate termination. According to Reuters, Trump argued that the funds allocated to the Act were not being effectively utilized and should instead be used to reduce the national debt.
In a scathing address, Trump questioned the financial allocations and effectiveness of the CHIPS Act. He stated, “Your CHIPS Act is a horrible, horrible thing. We give hundreds of billions of dollars, which doesn’t mean a thing. They take our money, and they don’t spend it. You should get rid of the CHIPS Act and whatever is left over, Mr. Speaker, you should use it to reduce debt.” Trump further suggested that imposing new tariffs would be sufficient to incentivize companies to establish semiconductor factories in the United States, eliminating the need for federal subsidies.
Amidst the uncertainty surrounding the future of the CHIPS Act, a significant development occurred as a third of the Act’s workforce was laid off. Reuters reported that 40 employees were dismissed, with an additional 20 leaving under the government’s deferred resignation program. Among those who resigned was Todd Fisher, the Chief Investment Officer of the CHIPS Office, who stepped down the previous week. The layoffs have sent shockwaves through the semiconductor industry, sparking a range of reactions and opinions.
Governor Kathy Hochul of New York, a Democrat, defended the CHIPS Act, highlighting its role in attracting £77.90 billion ($100 billion) in investments from Micron, resulting in the creation of 50,000 jobs in Central New York. On the other hand, Commerce Secretary Howard Lutnick acknowledged the Act’s benefits but suggested that the Trump administration should review contracts awarded under Biden, indicating a possible restructuring instead of complete elimination.
Understanding the CHIPS Act
The CHIPS and Science Act was signed into law in August 2022 with the goal of bolstering domestic semiconductor production and reducing reliance on foreign suppliers. The legislation allocated £41.05 billion ($52.7 billion) to the sector, with a significant portion earmarked for manufacturing incentives and research and development. By August 2024, the Department of Commerce had distributed £23.37 billion ($30 billion), funding 23 projects across 15 states and creating 115,000 jobs in manufacturing and construction.
Industry giants such as Taiwan Semiconductor Manufacturing Company (TSMC), Intel, and Samsung have responded positively to the Act, committing substantial investments to expand U.S. operations and establish new manufacturing facilities. TSMC, in particular, pledged £77.90 billion ($100 billion) towards building advanced fabrication plants and research centers in the United States.
Potential Implications of Repealing the CHIPS Act
If President Trump were to dismantle the CHIPS Act, the U.S. semiconductor industry could face significant setbacks. Halted projects, reduced investments, and job losses in key technology hubs are potential consequences of repealing the Act. The decline in America’s share of global semiconductor production from 37% in 1990 to 12% today, largely due to a lack of government incentives, could worsen if the financial backing of the CHIPS Act is removed. This could result in increased dependence on foreign suppliers, particularly China, which has been heavily investing in its semiconductor sector.
As the debate over the fate of the CHIPS Act continues, industry leaders, policymakers, and economists are sharply divided on whether scrapping the initiative will streamline government spending or impede U.S. innovation in an increasingly competitive global market.
President Trump’s criticism of the CHIPS Act has sparked a contentious discussion about the future of semiconductor manufacturing in the United States, with stakeholders weighing the benefits of federal support against the potential risks of dismantling a crucial initiative. The outcome of this debate could have far-reaching implications for the nation’s technological self-sufficiency and economic competitiveness in the global landscape.
