Former President Donald Trump has called for the repeal of the Chips Act, a 2022 law that provides $52.7 billion in subsidies to boost U.S. semiconductor production. In his first address to Congress since returning to office, Trump criticized the program, arguing that the funds should instead go toward reducing the $36.2 trillion national debt.
“Your Chips Act is a horrible, horrible thing,” Trump said. “We give hundreds of billions of dollars, and it doesn’t mean a thing. They take our money and don’t spend it.” Addressing House Speaker Mike Johnson, he urged, “You should get rid of the Chips Act and use whatever is left to reduce debt.”
Trump’s remarks have reignited the debate over government subsidies for chipmakers, a key issue in U.S. efforts to reduce reliance on foreign semiconductor manufacturing.
Tariffs Over Subsidies?
Trump believes semiconductor companies don’t need government handouts to build factories in the U.S. Instead, he argues that new tariffs on imported chips and other goods will push manufacturers to relocate production to American soil.
“We don’t have to give them money,” Trump said, emphasizing that his approach relies on financial pressure rather than incentives.
TSMC Expands U.S. Investment Despite Policy Uncertainty
Despite Trump’s stance, Taiwan Semiconductor Manufacturing Company (TSMC)—the world’s largest contract chipmaker—has committed an additional $100 billion to U.S. chip manufacturing, bringing its total investment to $165 billion. The decision signals confidence in the American market, even as the future of semiconductor subsidies remains uncertain.
Commerce Secretary Howard Lutnick credited Trump’s tariff policies for making the U.S. more attractive for manufacturing, but clarified that TSMC will not receive additional subsidies beyond its existing $6.6 billion grant under the Chips Act. The company, which has already received $1.5 billion of that award, remains eligible for a 25% investment tax credit.
How the Chips Act Has Been Allocated
Since its passage, the Chips Act has awarded $32.5 billion in grants and $5.5 billion in loans to 32 companies across 23 states. The biggest recipients include:
- Intel – $8.5 billion
- Samsung – $6.4 billion
- Micron – $6.1 billion
- GlobalFoundries – $1.5 billion
- TSMC – $6.6 billion
These funds were intended to strengthen U.S. chip production, reduce dependency on foreign supply chains, and prevent disruptions like those seen during the COVID-19 pandemic.
Backlash Against Trump’s Proposal
Trump’s call to scrap the Chips Act has drawn sharp criticism from policymakers, especially those in states benefiting from semiconductor investment.
New York Governor Kathy Hochul pointed to Micron’s $100 billion investment in the state and the 50,000 jobs it will create. “The Chips Act is the reason this is happening,” she said. “Trump just said he wants to get rid of it.”
Representative Greg Stanton also condemned the proposal, calling it a “direct attack on Arizona’s semiconductor industry and tens of thousands of Arizona workers.” Arizona has been a major recipient of Chips Act funding, with companies expanding operations in the state.
Adding to concerns, recent reports indicate that the Commerce Department office overseeing the Chips Act has laid off a third of its staff, raising doubts about the program’s future.
What’s Next for the Chips Act?
The Chips and Science Act, signed into law in August 2022, was designed to address the global semiconductor shortage and reduce dependence on foreign manufacturers, especially Taiwan, which produces 90% of the world’s most advanced chips.
The law set aside:
- $39 billion for manufacturing incentives (grants and loans)
- $13.2 billion for research and development
Supporters argue that the Act is crucial for national security and maintaining U.S. technological leadership, while critics, including Trump, see it as unnecessary spending.
With Trump pushing to reallocate funds, the fate of the Chips Act remains uncertain. Congress now faces a heated debate over whether to continue investing in semiconductor subsidies or prioritize national debt reduction.
