Trump wants to scrap the Chips Act subsidies

Introduced under the Biden administration, the Chips Act is being revised by Trump and his administration to make it even more profitable despite significant subsidies. As a reminder, the measure is intended to provide valuable assistance to certain US companies in need, such as Intel and Micron, but also to attract Asian players such as TSMC and Samsung to the US.

The Trump administration is renegotiating some of the subsidies granted to semiconductor manufacturers under the Biden administration, US Commerce Secretary Howard Lutnick said Wednesday during a Senate hearing. This move could lead to the cancellation of several subsidies that were initially planned.

"Some of these subsidies just seemed too generous, and we were able to renegotiate them," Lutnick told the Senate Appropriations Committee, adding that the goal is to get better terms for US taxpayers.

"All the agreements are improving, and those that have not been concluded are those that should never have been concluded," he continued, suggesting that some funding would not be renewed.

Signed in 2022, the Chips and Science Act aimed to inject $52.7bn to boost semiconductor production and research in the United States, while attracting Asian-based manufacturers. The program included billions in subsidies for industry giants such as TSMC (Taiwan), Samsung and SK Hynix (South Korea), as well as US companies Intel and Micron.

While the subsidies were approved, their disbursement had only just begun when Joe Biden left office. Details remain confidential, but the funds are to be released as companies move forward with their industrial expansion plans.

More results for the same amount of money

Howard Lutnick cited TSMC as an example of a successfully renegotiated agreement. The Taiwanese manufacturer, which received a $6 billion subsidy, reportedly increased its investment commitment in the US from $65bn to $165bn.

"We were able to adjust the aid while maintaining the $6bn in public funding," he said.

TSMC announced the $100bn increase in March, but it is not yet clear whether this decision is a direct result of the renegotiation of public support.

According to information reported by Reuters in February, the White House had already indicated its intention to review certain agreements, and some payments had been delayed.

Lutnick also said that the administration shares the ambition to keep more than 50% of global AI computing capacity on US soil. He was responding to concerns raised by the recent agreement with the United Arab Emirates to purchase advanced artificial intelligence chips manufactured in the United States. Such transactions could indeed weaken national strategic computing capabilities.