Trump wants to kill $52.7bn semiconductor chips subsidy law

US President Donald Trump said on Tuesday legislators should get rid of a landmark 2022 bipartisan law to give $52.7bn (R969.42bn) in subsidies for semiconductor chips manufacturing and production and use the proceeds to pay debt.

“The CHIPS Act is a horrible thing. We give hundreds of billions of dollars and it doesn't mean a thing. They take our money and they don't spend it,” Trump said in a speech to Congress.

“You should get rid of the CHIPS Act and whatever is left over you should use to reduce debt.”

The CHIPS and Science Act signed by then president Joe Biden in August 2022 included $39bn (R717.62bn) in subsidies for US semiconductor manufacturing and related components, with $75bn (R1.38-trillion) in government lending authority.

Commerce secretary Howard Lutnick has praised the programme but said previously he wanted to review awards finalised during the Biden administration.

Under Biden the commerce department convinced all five leading-edge global semiconductor firms to locate factories in the US in an effort to tackle national security risks from imported chips.

In the final weeks of the Biden administration, the department finalised more than $33bn (R607.02bn) in awards, including:

• $4.74bn (R97.26bn) to South Korea's Samsung Electronics;
• up to $7.86bn (R144.52bn) for Intel;
• $6.6bn (R121.34bn) for Taiwan Semiconductor Manufacturing Company (TSMC); and
• $6.1bn (R112.15bn) for Micron.

Some officials have expressed concern Trump could seek to invalidate binding grant agreements struck in the Biden administration.

New York governor Kathy Hochul said on Tuesday the law “is the reason Micron is bringing $100bn (R1.83-trillion) and 50,000 jobs to Central New York. Trump just said he wants to get rid of it.”

TSMC announced this week with Trump it plans to make a new $100bn investment in the US that involves building five additional chip facilities in coming years.

Lutnick referenced the $6.6bn award in a White House event — but noted the department was not planning to give TSMC any new subsidies. TSMC said last month it has already received $1.5bn (R27.57bn) of its award.

This week about one-third of the staff in the commerce department office overseeing $39bn (R717.23bn) of manufacturing subsidies for chipmakers was laid off, two sources familiar with the situation said.

Reuters reported last month the new Trump administration, which has embarked on a dramatic overhaul of the federal government, is reviewing the projects awarded.

Reuters