On Tuesday, U.S. President Donald Trump has called for the repeal of the 2022 bipartisan CHIPS and Science Act, suggesting that the $52.7 billion in subsidies earmarked for semiconductor manufacturing should instead be redirected towards reducing national debt.
Criticizing the Act during a speech to Congress, Trump argued that the funds are not being utilized effectively and that ending the Act would eliminate unnecessary spending.
Enacted under former President Joe Biden in August 2022, the CHIPS and Science Act allocated $39 billion specifically for U.S. semiconductor production and an additional $75 billion in government lending authority.
Trump’s remarks represent his most severe critique of the legislation, as he posited that the threat of new tariffs could be sufficient to persuade industries to develop U.S. manufacturing capacity without the need for financial incentives.
Meanwhile, Commerce Secretary Howard Lutnick has acknowledged the merits of the program, though he has expressed an interest in revisiting the awards that were finalized during Biden’s administration.
Notably, former Commerce Secretary Gina Raimondo under the Biden administration successfully negotiated with major global semiconductor firms to establish manufacturing facilities in the U.S. as a strategy to mitigate national security risks from imported chips.
Under Biden, more than $33 billion in awards were finalized, with significant allocations to companies such as South Korea’s Samsung Electronics, Intel, Taiwan Semiconductor Manufacturing Co (TSMC), and Micron. With concerns that Trump might annul these agreements, certain officials are apprehensive about future implications.
New York Governor Kathy Hochul highlighted the law’s role in facilitating a commitment from Micron to invest $100 billion and create 50,000 jobs in Central New York, opposing Trump’s call for the Act’s repeal.
TSMC, in collaboration with Trump, recently declared plans for a $100 billion investment to build additional chip facilities in the U.S. While Commerce Secretary Lutnick acknowledged TSMC’s significant prior award of around $6.6 billion, he clarified that no new subsidies are planned, although they could benefit from a 25% manufacturing investment tax credit. Last month, the company announced it has already received a portion of its allocated funds of $1.5 billion.
Representative Greg Stanton defended the legislation, emphasizing its crucial role in advancing Arizona’s semiconductor industry and securing employment for thousands of workers.
According to a Reuters report citing sources with knowledge of the matter, around one-third of the staff in the U.S. Commerce Department office responsible for overseeing $39 billion in manufacturing subsidies for chipmakers was laid off this week.
Last month, Reuters also reported that the Trump administration, in its effort to revamp the federal government, is assessing the projects that have been awarded under this initiative.
