President Donald Trump reports that U.S. lawmakers should repeal the CHIPS Act. That law provides $52.7 billion in semiconductor production and manufacturing subsidies.
Trump calls it a terrible law, according to Reuters. The state would spend hundreds of billions of dollars to no avail. Congress should repeal the CHIPS Act. What remains should be used to reduce debt.
The CHIPS and Science Act, signed by former president Joe Biden in August 2022, included $39 billion in subsidies for U.S. semiconductor manufacturing and related components. This is in addition to $75 billion in borrowing authority from the government.
The comments are Trump’s strongest criticism of the CHIPS Act to date. According to him, the U.S. does not need to give any money because avoiding new tariffs will be enough to convince chip makers to build factories in the U.S.
The Secretary of Commerce Gina Raimondo, who served under Biden, convinced five leading global semiconductor companies to establish factories in the United States through government grants. This in an effort to address the national security risks posed by imported chips. In the final weeks of the Biden administration, the Commerce Department approved more than $33 billion in exchanges, including $4.745 billion for South Korean Samsung Electronics. In addition to up to $7.86 billion for Intel $6.6 billion for Taiwan Semiconductor Manufacturing Co and $6.1 billion for Micron.
Some officials fear that Trump is trying to invalidate binding grant agreements that the Biden administration entered into. New York Governor Kathy Hochul said Tuesday that the law is the reason Micron is investing $100 billion and creating 50,000 jobs in Central New York.
TSMC complaints
TSMC announced this week that it plans to make a new $100 billion investment in the United States. The plans consists of building five additional chip facilities over the next few years. Lutnick referred to the $6.6 billion grant for TSMC during an event at the White House on Monday, but noted that the Department does not appear to be planning to give TSMC new grants. It really qualifies for a 25% tax credit for investment in manufacturing.
TSMC said last month that it has already received $1.5 billion in subsidies. Chamber member Greg Stanton said Trump’s comments directly attacked Arizona’s semiconductor industry and tens of thousands of Arizona workers. He said TSMC’s $100 billion investment would not have occurred without the law. This week, two sources familiar with the situation said about a third of the staff at the U.S. Commerce Department office that manages $39 billion in subsidies for chipmakers was laid off.
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