CHIPS and Science Act Donald Trump wants to overturn the semiconductor aid law

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US President Donald Trump has urged the US Congress to abolish the "CHIPS & Science Act," passed in 2022, for semiconductor aid. The 52.7 billion US dollars earmarked in the law for the research, development, and production of new semiconductors should instead be directed towards debt reduction.

"Your CHIPS Act is a terrible, terrible thing," Trump said in a speech to Congress. "We are giving away hundreds of billions of dollars and it makes no sense. They [the companies] take our money and don't spend it." The Congress should, according to his recommendation, abolish the law and use the remaining funds for debt reduction.

Contradictory statements on the CHIPS and Science Act

The CHIPS and Science Act did not spend hundreds of billions of US dollars. In the bill initiated by the first Trump administration and finally passed on a bipartisan basis in 2022, 52.7 billion US dollars were allocated for the promotion of research, development, and production of semiconductors in the United States. Of these funds, about 33 billion US dollars were awarded to various companies under President Joe Biden's administration. In addition, there are tax credits of up to 20 percent. Furthermore, the government offered 75 billion US dollars in low-interest loans under the act, which, however, were not utilized in most cases.

It is not the first time that Donald Trump has criticized the CHIPS and Science Act. In an interview with the right-wing conservative podcaster Joe Rogan, the sitting US President already described the funding program as "so bad" and complained that "billions of dollars to wealthy companies" were being given away. Since then, hardly a week goes by without Trump calling the law, which was initially conceived during his first term, ridiculous or bad.

However, Trump's latest attack is his sharpest yet and the first time he has directly addressed the legislative assembly with his demand. "We don't have to give them money," Trump emphasized in his speech. In his view, the threat of high tariffs is incentive enough for companies to induce them to build new fabs in the USA.

Trump's claims are once again in contradiction with statements from his own administration. The Trump-appointed Commerce Secretary, Howard Lutnick, praised the program and launched the STAR-Act (Semiconductor Technology Advancement and Research) on January 27, 2025, as a continuation of the loans and tax benefits established in the CHIPS & Science Act. However, Lutnick also announced plans to review the conditions for already committed funds.

Democrats fear the withdrawal of already pledged investments by semiconductor companies

Some government officials have expressed concern to the Reuters news agency that Trump might declare some of the commitments made under his predecessor invalid by decree. Shortly before the end of their legislative period, the Biden administration had announced a series of large sums under the CHIPS & Science Act, including to the three largest semiconductor companies in the world at that time. Intel was to receive 7.86 billion USD in funding, TSMC about 6.6 billion USD and an additional 5 billion USD in loans for the construction of its facilities in Arizona, and Samsung nearly 4.8 billion USD for the construction of a high-end facility in Texas.

Micron, which initiated a mega-investment in the USA, was promised 6.1 billion USD from the funding pot. The CHIPS and Science Act is the reason why the US memory manufacturer is bringing an investment of "100 billion USD and 50,000 jobs to Central New York," said Kathy Hochul, the Democratic governor of New York, to Reuters. The repeal of the funding law could jeopardize this decision. Similar comments were made regarding TSMC's efforts to invest in setting up its facilities in Arizona. Earlier this week, TSMC announced its intention to invest another 100 billion USD in the establishment of its US production facilities. This intention by TSMC had been proclaimed by Trump himself as his own success.

It is questionable who should carry out these new reviews or the disbursement for milestones agreed upon in already made commitments. Due to massive cuts and job reductions in US agencies, which were initiated just last month, about one-third of the staff in the office of the US Department of Commerce was laid off. Currently, 39 billion USD in production subsidies for chip manufacturers are still being monitored there, according to two sources familiar with the situation who spoke to Reuters.

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