US President Donald Trump called for ending a bipartisan US$52 billion semiconductor subsidy programme that’s spurred more than US$400 billion ($535.59 billion) in investments from companies like Taiwan Semiconductor Manufacturing Co. and Intel.
“Your Chips Act is horrible, horrible thing,” the president said in a primetime address to Congress on Tuesday. Trump implored US House Speaker Mike Johnson to “get rid” of the legislation and use “whatever is left over” to “reduce debt or any other reason you want to”.
His remarks were met with applause in a chamber that less than three years ago passed the Chips and Science Act on a bipartisan basis. Vice President JD Vance, whose home state of Ohio won a massive Intel project thanks to the law, stood up to show his support for its revocation.
The Chips Act is among most significant US forays into industrial policy in more than a generation. It set aside US$39 billion in grants — plus loans and 25% tax breaks — to revitalise American semiconductor manufacturing, as well as US$11 billion for chip research and development. The aim is to reduce reliance on Asia for tiny electronic components that power everything from microwaves to missiles.
Democrats and Republicans have touted the Chips Act as crucial to US national and economic security, and Trump could have a hard time getting the votes to repeal it. Dozens of GOP lawmakers voted for the measure, and many red districts have have won factories or other projects supported by the law.
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Trump has expressed support for the overall goal of boosting domestic chipmaking, but he’s consistently derided the Chips Act as a means of achieving it. Instead, the president has called for tariffs to stoke investment in the US, and he’s signalled that import levies on chips could come as soon as next month, without offering additional detail.
On Monday, he credited the threat of those duties with TSMC’s decision to invest an additional US$100 billion in the US.
Trump touted TSMC’s investment again Tuesday, citing a US$165 billion figure that also includes the company’s previous commitments. The company originally announced plans to spend US$12 billion in Arizona during Trump’s first administration, and ramped up that pledge to US$65 billion – for three factories – under Biden.
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The company is in line to win US$6.6 billion in Chips Act grants to support those three facilities, under an agreement reached during Biden’s term.
“We’re not giving them any money,” Trump told lawmakers Tuesday. It’s unclear whether he was referring to government support for TSMC’s latest US$100 billion pledge – which was not part of its Chips Act award – or if he’s threatening to take away incentives to which the US government has already committed. TSMC declined to comment.
TSMC is among 20 companies that reached binding agreements for Chips Act support before Biden left office. The deals, which represent more than 85% of the manufacturing incentives available under the programme, are designed to support leading-edge facilities by companies like TSMC, Intel, Samsung Electronics and Micron Technology — as well as older-generation factories by the likes of GlobalFoundries and Texas Instruments.
Generally speaking, companies have viewed those agreements to be ironclad — regardless of who’s in office. But some firms have worried that the Trump administration could seek to modify the terms, Bloomberg has reported.
Commerce Secretary Howard Lutnick has said he cannot commit to honouring existing contracts without reviewing them first. But beyond that, his intentions for the programme remain unclear. So far, his questions to current staff for the effort have focused on the rationale behind award decisions and the government’s legal authority to claw money back, Bloomberg has reported.
Chart: Bloomberg
