Trump wants to scrap $52.7B subsidy for making semiconductor chips
What's the story
US President Donald Trump has proposed the termination of the CHIPS Act, which allocates $52.7 billion in subsidies for semiconductor manufacturing.
He plans to use these funds to reduce the national debt, a move that could significantly impact both economic policy and the tech industry.
"Your CHIPS Act is a horrible, horrible thing," Trump told Congress. "We give hundreds of billions of dollars and it doesn't mean a thing."
Act overview
What does the CHIPS Act entail?
Former President Joe Biden signed the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act into law in August 2022.
The legislation offered $39 billion in subsidies for semiconductor component manufacturing in the US and $75 billion in government loans.
Its primary objective was to decrease reliance on semiconductor production from nations such as Taiwan and China.
Strong opposition
Trump's criticism of the CHIPS Act
Trump's latest remarks mark one of his strongest attacks on the CHIPS Act yet.
"We don't have to give them money," he said, implying that not imposing new tariffs would be enough to get companies to build US factories.
Under Biden, former Commerce Secretary Gina Raimondo persuaded all five leading global semiconductor firms, including Samsung Electronics and Intel, through government grants over national security concerns related to imported chips.
Worry
Concerns over Trump's proposal
In the final weeks of Biden's presidency, the Commerce Department had finalized over $33 billion in grants to companies. However, the validity of these grants has been questioned following Trump's announcement.
New York Governor Kathy Hochul said this law "is the reason Micron is bringing $100 billion and 50,000 jobs to Central New York."
TSMC also announced plans for a $100 billion investment in the US, including setting up five additional chip facilities there in coming years.
Layoffs
Trump lays off Commerce Department staff overseeing semiconductor subsidies
This week, Trump laid off nearly one-third of the staff in the US Commerce Department office, which oversees $39 billion in manufacturing subsidies for chipmakers.
The move is part of a broader overhaul of the federal government by Trump's administration.
The new administration is also reviewing projects awarded under Biden's tenure, potentially impacting future funding for semiconductor manufacturing.