The Trump administration is set to slash jobs at the National Institute of Standards and Technology (NIST), targeting the CHIPS Act and AI safety programs. Nearly 500 employees, most hired within the last year, are expected to be dismissed under their “probationary” status. Without these workers, the CHIPS Act—created to boost U.S. semiconductor production—could become ineffective, as there will be no one left to oversee compliance or allocate funding.
CHIPS Act in Uncertain Territory
NIST, which manages the CHIPS Act, is bracing for 497 job cuts. Those affected include:
- 74 postdoctoral researchers
- 57% of staff focused on CHIPS incentives
- 67% of staff dedicated to CHIPS research and development
These layoffs come as the administration shifts strategy. Instead of supporting domestic chip production, President Trump has announced a 25% tariff on imported semiconductors. While intended to curb reliance on foreign-made chips, experts warn this approach could backfire.
Currently, all AI chips and a significant portion of Intel and AMD processors come from Taiwan. Additionally, over 80% of semiconductor memory chips are produced overseas. With CHIPS Act funding in question and tariffs raising costs, U.S. tech companies could face supply chain disruptions and rising prices.
AI Safety Efforts Also Hit
Beyond semiconductors, NIST’s AI safety initiatives are also in jeopardy. The U.S. AI Safety Institute (AISI), which was created to ensure that artificial intelligence models remain reliable and secure, has already lost its leader. AISI staff were also excluded from a recent AI summit in Paris, raising concerns about the program’s future.
These cuts come at a crucial moment. As AI development accelerates worldwide, particularly in China, the U.S. risks falling behind in regulating and shaping the future of the technology. Without oversight, experts warn that AI advancements could become increasingly unpredictable and difficult to control.
Industry Uncertainty and Economic Risks
The semiconductor industry was already facing headwinds, and the expected dismantling of the CHIPS Act could further strain the sector in 2025. Many companies had planned expansions based on anticipated CHIPS Act funding, but these projects may now be delayed or canceled altogether.
Some analysts predict that spending on wafer fabrication equipment (WFE) could decline next year, reversing earlier expectations of steady growth. Uncertainty around funding could force companies to rethink their investments, slowing progress in U.S. chip manufacturing.
Additionally, these policy shifts could affect Taiwan Semiconductor Manufacturing Company’s (TSMC) potential takeover of Intel’s manufacturing operations. With the administration taking a tougher stance on Taiwan’s role in the chip industry, such a deal may no longer align with U.S. strategic priorities.
A Radical Shift in Semiconductor Policy
The Trump administration’s latest moves signal a major departure from previous efforts to strengthen U.S. semiconductor production. Rather than offering incentives for domestic manufacturing, the focus appears to be on restricting imports and reducing government involvement in the sector.
Critics argue that these changes could undermine America’s technological leadership, especially as China continues to invest heavily in both semiconductor production and AI research. With the CHIPS Act in limbo and AI safety initiatives gutted, the long-term consequences of these cuts remain uncertain.
As the situation unfolds, industry leaders and policymakers will be watching closely to see how these decisions impact the U.S. tech industry’s global standing.
