The Trump administration has downsized the U.S. CHIPS Program Office, laying off 40% of its staff as part of a broader restructuring. This move affects 60 employees, with layoffs set to be finalized by the end of the day.
According to reports from Bloomberg, 20 employees resigned voluntarily last week, while the remaining 40, classified as “probationary” workers who had been in their roles for under two years, were notified that their positions would be eliminated by Monday.
Reevaluating the CHIPS Act
The CHIPS and Science Act, introduced by the Biden administration, was designed to strengthen domestic semiconductor manufacturing with a $52 billion investment. The initiative spurred major companies like Intel and TSMC to pledge $400 billion toward expanding U.S. semiconductor production.
However, President Trump has been critical of the legislation, favoring a different approach to bolstering the U.S. chip industry. Rather than relying on direct grants, his administration is leaning toward tariff-based economic strategies to encourage companies to relocate operations to the United States.
Funding Agreements Under Scrutiny
Several funding agreements under the CHIPS Act included provisions such as supporting unionization efforts for semiconductor workers and requiring paid parental leave. These policies, implemented under Biden, are now being reviewed under the new administration.
“The CHIPS Program Office has told us that certain conditions that do not align with President Trump’s executive orders and policies are now under review for all CHIPS Direct Funding Agreements,” said Leah Peng, spokesperson for semiconductor supplier GlobalWafers.
This shift signals a potential overhaul in how government support for chip manufacturing is structured. Instead of offering subsidies, the Trump administration appears to favor market-driven incentives like tariffs to encourage companies to invest in domestic production.
TSMC Commits $100 Billion to U.S. Expansion
The new strategy has already yielded significant investment. TSMC, the world’s largest semiconductor manufacturer, recently announced a $100 billion expansion in the U.S., which includes the construction of three new fabrication plants.
Commerce Secretary Howard Lutnick emphasized that this investment was driven by economic incentives rather than government grants. “America gave TSMC 10% of the money to build here,” Lutnick stated at a White House press conference. “And now you’re seeing the power of Donald Trump’s presidency because TSMC, the greatest manufacturer of chips in the world, is coming to America with a $100 billion investment. Of course, that is backed by the fact that they can come here because they can avoid paying tariffs.”
This marks one of the largest foreign investments in U.S. semiconductor manufacturing, underscoring Trump’s preference for leveraging economic pressures rather than direct subsidies to bring production back to American soil.
What’s Next for the CHIPS Program Office?
The CHIPS Act has been widely credited with jumpstarting the revival of the U.S. semiconductor industry, leading to record investments in chip manufacturing. However, with significant staffing cuts and potential policy shifts, the future of the CHIPS Program Office remains uncertain.
Officials have assured that all previously allocated funds have been contracted, but industry experts warn that additional layoffs or funding reductions could further impact the office’s ability to oversee semiconductor investments effectively.
As the Trump administration continues to reshape its approach to semiconductor policy, the coming years will reveal whether this new strategy strengthens the U.S. chip industry or hinders its long-term growth.
