President Donald Trump, during his address to Congress on Tuesday, called for the repeal of the $52.7B Chips and Science Act. The initiative sanctioned in 2022 was intended to bolster the US semiconductor manufacturing industry.
The Chips and Science Act was introduced under former President Joe Biden’s administration to increase local semiconductor manufacturing and strengthen the sector against competitors like China.
The Chips Act allocated $52.7B in subsidies to various major tech companies, including Samsung, Intel, and Micron. It put $39B toward manufacturing incentives and $75B in government loan authority, awarding over $33B during the Biden administration.
Trump’s critique of the Chips Act
“Your Chips Act is a horrible, horrible thing,” President Trump said in his address to Congress. The bipartisan $52B semiconductor subsidy program has catalyzed more than $400B in investments from companies like Taiwan Semiconductor Manufacturing Co. (TSMC) and Intel Corp.
With the success of the subsidy program, it’s hard to consider it a “horrible” program that needs to end, but that is how President Trump views it. The president asked US House Speaker Mike Johnson to get rid of the subsidy program and use “whatever is left over” to “reduce debt or any other reason.”
Trump regards the Chips Act as a waste of government funds, instead arguing that tariffs would also bring in investments from semiconductor companies and boost local production.
Officials in the Republican and conservative camps have previously considered the Chips Act as a pillar of the United States’ national and economic security. Hence, Trump could have a hard time garnering sufficient support from lawmakers to repeal the Chips Act. Notwithstanding, his negative remarks about the program were met with applause from Congress members, some of who have benefited from the legislation and helped pass it less than three years ago, including Vice President JD Vance.
Lawmakers weigh in
Lawmakers from regions benefiting from Biden’s Chips Act are concerned about the proposed repeal. New York Governor Kathy Hochul highlighted that repealing the act would threaten over 50,000 jobs in Upstate New York.
“Anyone threatening to repeal the CHIPS & Science Act is threatening more than 50,000 good-paying jobs in Upstate New York and $231 billion worth of economic growth nationwide,” she said
Similarly, Representative Greg Stanton emphasized the positive impact of the act on the economy and employment in Arizona. He claims that Trump’s remarks about the project were a “direct attack” on the semiconductor industry in Arizona and the tens of thousands of workers the act creates employment for.
House Speaker Mike Johnson initially voted against the Chips Act when it was first presented in 2022 and suggested that a Republican victory could lead to its repeal. Now that he has a Republican majority, Mike Johnson favors legislation to eliminate costly regulations and environmental requirements associated with the act.
Companies like South Korea’s Samsung Electronics Co., TSMC, and SK Hynix Inc. have committed to multibillion-dollar projects in Texas and Indiana. All of these operations would be affected if President Trump scraps the Chips Act.
Despite Trump’s remarks and the uncertainty of the situation, Intel, TSMC, and Broadcom saw their stock values rise as analysts from Raymond James believe that the Chips Act will remain in place and continue to provide capital expenditure tax credits.
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