During a recent address to Congress, former President Donald Trump diverged from his prepared remarks to express strong opposition to the CHIPS Act, a bipartisan initiative designed to enhance the U.S. semiconductor industry and reduce dependency on Asian suppliers.

Background of the CHIPS Act

Enacted in 2022, the CHIPS Act was crafted through collaboration between lawmakers from both parties and private sector entities. It earmarks $50 billion to rebuild the nation’s semiconductor manufacturing capabilities, crucial for powering various technologies, from vehicles to household appliances. Since its implementation, several companies have initiated construction of new facilities across states like Arizona, New York, and Ohio, bolstered by financial support from the Commerce Department.

Trump’s Reversal and Its Repercussions

Trump’s unexpected remarks, labeling the CHIPS Act as a “horrible, horrible thing,” elicited applause from some within the audience. He urged Speaker of the House Mike Johnson to reconsider the law, which had previously garnered bipartisan support in Congress.

This sudden shift has raised concerns among semiconductor industry leaders regarding the security of their funding, prompting requests for legal consultations on the potential for contract alterations. According to sources, the uncertainty has resulted in executives reaching out to legal teams to assess their options following Trump’s statements.

Industry Response and Legislative Concerns

Senator Todd Young of Indiana, a supporter of the CHIPS initiative, voiced apprehension over Trump’s comments, indicating they conflicted with past commitments from the administration. “If it needs to transform into a different model over a period of time, I’m certainly supportive of that,” expressed Young. “But let’s be clear, the CHIPS and Science Act has mostly been implemented. It has been one of the greatest successes of our time.”

Operational Changes and Industry Perspectives

Despite the ongoing support for the program, the Trump administration has begun to make changes to the CHIPS Act’s operational framework. Reports indicate that recent layoffs in the CHIPS Program Office and scrutiny over funding appropriations could impact existing projects.

Over $36 billion in grants have been secured under the CHIPS Act, leading major companies like Intel, Samsung, and TSMC to commit to substantial investments in U.S. manufacturing facilities. The industry is wary that Trump’s opposition may alter the trajectory of these investments.

Future Directions Amidst Uncertainty

Trump’s alternative suggestion involves imposing tariffs as a means to incentivize domestic production rather than utilizing subsidies. He claimed that such tariffs previously led TSMC to increase its investment commitments in the U.S., arguing, “We don’t have to give them money… they will come because they won’t have to pay tariffs if they build in America.”

Nonetheless, industry officials argue that tariffs may not be as effective in elevating chip manufacturing in the U.S. because of the complex, global nature of chip supply chains. The discourse around the CHIPS Act and its future remains contentious, with stakeholders eager to ensure the program’s continued success.