US President Donald Trump called for an end to the CHIPS and Science Act during his speech to Congress this Tuesday (4 March). The landmark policy was passed under former US President Joe Biden and has been credited with revamping the US semiconductor industry, drawing in billion-dollar investments from companies like Taiwan Semiconductor Manufacturing (TSMC) and Samsung.
“Your CHIPS Act is a horrible, horrible thing,” he said during his address on Tuesday (4 March). He told House Speaker Mike Johnson to eliminate the policy and use “whatever is left over” to “reduce debt or any other reason”. Trump took credit for recent investment announcements by companies such as SoftBank, OpenAI and Apple in the US.
Go deeper with GlobalData
SoftBank’s CEO, Masayoshi Son, has a history of making grand announcements, casting doubt on his ability to deliver on his promise of completing the $100bn AI investment during Trump’s second term.
The CHIPS Act provided $280bn to build, expand and modernise the semiconductor industry in the US through a series of incentives, subsidies and loans for chip companies. The subsidy programme for semiconductors stood at $52b. It aims to increase domestic manufacturing and reduce reliance on Asia.
The policy was passed with support from dozens of Republican lawmakers and attracted major investments to Republican states.
According to a GlobalData report from 2024, the US semiconductor industry attracted more than $100bn in foreign direct investment (FDI) since 2019. It credited increases in TSMC’s investment into the US at the time to a $6.6bn subsidy acquired through the CHIPS Act.
TSMC recently announced it would boost its investment in the US by $100bn to build five new manufacturing plants. TSMC CEO C.C. Wei made the announcement alongside President Trump.
A total of 20 companies have binding agreements with the US Government through the CHIPS Act. Given the bipartisan support that the policy had received, companies have generally viewed these agreements as set in stone. However, if incentives get removed, some representatives have said that they would reconsider their investments.
Taiwanese company GlobalWafers Co has received $406m in CHIPS Act awards to build factories in Texas and Missouri. A spokesperson for the company said that, while they see changes to these contracts as “unlikely”, if changes occurred “we would reassess future investments, including evaluating US market demand, pricing and potential tariffs if production were moved outside the US”.
During his presidential campaign, Trump said that increasing tariffs would push companies towards investing directly in the US. Economists highlighted that such a shift would only take place over the course of many years, and that, in the meantime, tariffs would drive inflationary pressures for consumers.
