According to Bloomberg, former U.S. President Donald Trump has called for the termination of a bipartisan $52 billion semiconductor subsidy program, which has already spurred over $400 billion in investments from companies like TSMC and Intel in the United States.
On March 4, Trump launched a scathing attack on the CHIPS and Science Act, calling it a "horrible law." He urged House Speaker Mike Johnson to repeal the legislation and suggested reallocating the remaining funds to debt reduction or other priorities.
Trump's remarks were met with applause in the halls of Congress, despite the CHIPS and Science Act having passed with bipartisan support less than three years ago. U.S. Vice President JD Vance also backed the repeal, even though his home state of Ohio has greatly benefited from Intel's major investments under the act.
As one of the most significant U.S. industrial policies in recent years, the CHIPS and Science Act allocates $39 billion in subsidies, along with loans and a 25% tax credit, to revitalize the American semiconductor industry. It also provides $11 billion for chip research and development. The act aims to reduce U.S. dependence on Asian microelectronics, which are essential for everything from microwaves to missiles.
Since both Democrats and Republicans view the CHIPS and Science Act as crucial to national and economic security, Trump may face difficulties rallying votes to repeal it. Many Republican lawmakers previously supported the act, and several Republican districts have benefited from new factories and other projects funded by it.
While Trump supports the overall goal of boosting domestic chip manufacturing, he opposes achieving it through the CHIPS and Science Act. Instead, he advocates for using tariffs to encourage companies to invest in the U.S. He also hinted at potential import tariffs on chips, which could take effect as early as next month, though he did not provide specifics. On March 3, he credited TSMC's decision to invest an additional $100 billion in the U.S. to the threat of tariffs.
On March 4, Trump reiterated TSMC's investment plans, this time citing a total of $165 billion, including previous commitments. TSMC initially pledged $12 billion for a facility in Arizona during Trump's first term. Under former President Joe Biden, TSMC raised its commitment to $65 billion to build three factories. Under agreements reached during Biden's tenure, TSMC is set to receive $6.6 billion in subsidies from the CHIPS and Science Act for these projects.
Trump also told lawmakers on March 4, "We're not giving them any money." It remains unclear whether he was referring to withholding support for TSMC's latest $100 billion investment (which is not covered by the CHIPS Act) or threatening to revoke already committed incentives. TSMC declined to comment.
Before Biden leaves office, 20 companies, including TSMC, have signed legally binding subsidy agreements under the CHIPS Act. These agreements account for over 85% of the act's available manufacturing incentives and aim to support the advanced manufacturing facilities of TSMC, Intel, Samsung, and Micron, as well as the legacy chip plants of GlobalFoundries and Texas Instruments.
Overall, the business community largely views these agreements as legally binding, unaffected by changes in administration. However, according to Bloomberg, some companies remain concerned that a Trump administration could attempt to alter the terms.
U.S. Commerce Secretary Howard Lutnick has stated that he cannot commit to fully honoring existing CHIPS Act agreements without reviewing them first. His stance remains unclear. Bloomberg reports that so far, his inquiries to staff have mainly focused on the rationale behind previous chip funding decisions and the legal authority of a Trump administration to reclaim funds.
