Trump Wants CHIPS Act Gone, Suggests Using Funds to Cut US Debt

In a recent address to Congress, President Donald Trump called for the repeal of the 2022 bipartisan CHIPS and Science Act, which allocated $52.7 billion in subsidies to bolster U.S. semiconductor manufacturing. He urged lawmakers to redirect any remaining funds from the program toward debt reduction, stating, “You should get rid of the CHIPS Act and whatever is left over, Mr. Speaker, you should use it to reduce debt,” according to Reuters.

The CHIPS and Science Act, signed into law by then-President Joe Biden in August 2022, provided $39 billion in subsidies for U.S. semiconductor manufacturing and related components, along with $75 billion in government lending authority. Per Reuters, the legislation aimed to strengthen domestic chip production and reduce reliance on foreign suppliers.

Trump’s remarks represent his strongest criticism of the CHIPS Act to date. He suggested that instead of offering subsidies, the U.S. could incentivize companies to build factories domestically by avoiding new tariffs. “We don’t have to give them money,” Trump said, per Reuters, implying that tariff policies could serve as sufficient motivation for companies to establish operations in the United States.

Commerce Secretary Howard Lutnick has praised the CHIPS program but has expressed intentions to review awards finalized under the previous administration. According to Reuters, under former Commerce Secretary Gina Raimondo, the Biden administration secured commitments from all five leading-edge global semiconductor firms to build factories in the United States through government grants, aiming to address national security risks associated with imported chips.

In the final weeks of the Biden administration, the Commerce Department finalized more than $33 billion in awards, including $4.745 billion to South Korea’s Samsung Electronics, up to $7.86 billion for Intel, $6.6 billion for Taiwan Semiconductor Manufacturing Company (TSMC), and $6.1 billion for Micron, Reuters reported.

Trump’s call to repeal the CHIPS Act has sparked discussions about the future of semiconductor investments in the United States. Analysts from Raymond James believe the CHIPS Act will remain in place and continue to provide capital expenditure tax credits. Despite Trump’s remarks, major chip companies, including Intel, TSMC, and Broadcom, experienced an increase in their market values following his speech, according to Barron’s.

Source: Reuters