Trump Demands Termination of $52 Billion Chips Act Subsidy Program

(Bloomberg) — In a surprising turn of events, President Donald Trump has called for the termination of a bipartisan $52 billion semiconductor subsidy program that has already catalyzed over $400 billion in investments from major companies, including Taiwan Semiconductor Manufacturing Co. and Intel Corp. During a prime-time address to Congress on Tuesday, Trump described the Chips Act as a “horrible, horrible thing,” urging US House Speaker Mike Johnson to abolish the legislation and reallocate any remaining funds to reduce national debt or for other purposes.

Congressional Response to Trump’s Remarks

Trump’s remarks were met with applause from members of Congress, a stark contrast to the support the Chips and Science Act received less than three years ago. Vice President JD Vance, representing Ohio—a state that benefited significantly from the law through a massive Intel project—stood in support of Trump’s call for revocation. The Chips Act represents one of the most significant US initiatives in industrial policy in over a generation, allocating $39 billion in grants, along with loans and 25% tax breaks, aimed at revitalizing American semiconductor manufacturing.

Impact on National and Economic Security

The primary goal of the Chips Act was to reduce the United States’ reliance on Asian countries for electronic components that are essential for a wide range of technologies, from smartphones to large data centers. Both Democrats and Republicans have praised the Chips Act as vital for US national and economic security. However, Trump may face challenges in garnering enough votes to repeal it, as numerous GOP lawmakers supported the measure, and many districts have benefited from factories and projects funded by the law.

International Investments Linked to the Chips Act

Major companies like Taiwan’s TSMC and South Korea’s Samsung Electronics Co. and SK Hynix Inc. have either announced or begun construction on multibillion-dollar projects in the US, contingent on the funding and support provided by the US government through the Chips Act. Representatives from these companies have refrained from commenting on Trump’s recent statements.

Trump’s Alternative Approach to Boost Domestic Chipmaking

While Trump has expressed support for the overarching goal of enhancing domestic chip production, he has consistently criticized the Chips Act as an ineffective means to achieve this objective. Instead, he advocates for the implementation of tariffs to stimulate investment within the US. Trump has indicated that import levies on chips could be introduced as early as next month. On Monday, he credited the threat of tariffs for TSMC’s decision to invest an additional $100 billion in the US, on top of a previous commitment of $65 billion. In his address on Tuesday, he highlighted this project, referencing the total investment figure of $165 billion.

Uncertain Future for TSMC’s Investments

Trump stated, “We’re giving them no money. All that was important to them was they didn’t want to pay the tariffs.” However, the implications of this statement for TSMC remain unclear. The company initially announced plans for a $12 billion facility in the US during Trump’s first term and later expanded that project to include three factories under President Biden’s administration. To support these facilities, TSMC reached an agreement with Biden officials for $6.6 billion in Chips Act grants and $5 billion in loans. As with other awards from the Chips Act, the funding is intended to be disbursed over time as TSMC meets negotiated project milestones. Notably, the company received $1.5 billion before Biden left office.

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