US President Donald Trump has called on Congress to repeal the 2022 CHIPS and Science Act, a bipartisan measure that allocated $52.7bn in subsidies to strengthen domestic semiconductor manufacturing. He proposed redirecting these funds towards reducing the national debt and suggested an alternative approach to attracting chipmakers.
“Your CHIPS Act is a horrible, horrible thing; we give hundreds of billions of dollars and it doesn’t mean a thing,” Trump said during this year’s State of the Union address to Congress. “They take our money and they don’t spend it.” He argued that removing tariffs could be a more effective way to encourage semiconductor companies to establish facilities in the US.
The CHIPS Act, signed into law in August 2022 under former President Joe Biden, provided $39bn in direct subsidies for semiconductor production alongside $75bn in government-backed loans. The policy aimed to expand domestic chip manufacturing capacity and address security concerns related to reliance on foreign suppliers.
Commerce Secretary Howard Lutnick has previously expressed support for semiconductor investments but intends to review awards granted during the Biden administration. Under Biden, then-Commerce Secretary Gina Raimondo secured commitments from five major global chipmakers to establish production facilities in the US. In the final weeks of Biden’s presidency, the Commerce Department approved over $33bn in funding. This includes $4.74bn for Samsung Electronics, up to $7.86bn for Intel, $6.6bn for Taiwan Semiconductor Manufacturing Company (TSMC), and $6.1bn for Micron.
Officials have raised concerns that Trump may attempt to nullify grant agreements issued by the previous administration. New York Governor Kathy Hochul noted that the CHIPS Act played a key role in Micron’s $100bn investment, which is expected to create 50,000 jobs in Central New York.
Representative Greg Stanton criticised Trump’s comments, describing them as an “attack on Arizona’s semiconductor industry and tens of thousands of Arizona workers.” He stated that TSMC’s expansion in the state was driven by the incentives provided through the CHIPS Act.
Meanwhile, reports indicate that approximately one-third of employees from the US Commerce Department office overseeing the CHIPS Act’s $39bn subsidy programme were laid off this week, according to sources cited by Reuters. Last month, the news agency reported that the Trump administration had begun reviewing previously awarded projects as part of broader efforts to restructure federal operations.
Earlier this week, TSMC announced plans to invest $100bn in five additional US semiconductor fabrication plants over the coming years. At a White House event, Commerce Secretary Lutnick referenced TSMC’s $6.6bn subsidy but clarified that no additional funding is planned. However, TSMC remains eligible for a 25% manufacturing investment tax credit under existing federal incentives.
Taiwan reviews TSMC’s US expansion amid security concerns
Concurrently, the Taiwanese government has stated that its most advanced semiconductor technology will not be transferred to the US under the deal signed between TSMC and President Trump. The announcement follows concerns that the expansion could undermine Taiwan’s national security and its role as a global semiconductor leader.
Officials have confirmed that the agreement remains subject to government assessments, which will evaluate its alignment with national interests and its impact on investors. Authorities have indicated that the review process will consider economic and technological factors, including whether increased US-based production could weaken Taiwan’s strategic position in the global semiconductor industry.
The deal, announced on Monday by Trump and TSMC chief executive CC Wei, has sparked debate in Taiwan, where the semiconductor sector is central to the economy and national security. Some lawmakers and analysts have cautioned that shifting production overseas could reduce Taiwan’s influence in the global supply chain.
Read more: Taiwanese chip firm TSMC to expand US presence with additional $100bn investment
