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President Trump has levelled his heaviest criticism yet against the CHIPS act, stating that US lawmakers should get rid of it altogether. According to Reuters, the United States president told congress they should ditch the 2022 act and use whatever is left of its $52 billion in subsidies to pay debts, rather than to encourage building semiconductor factories on United States soil.
“Your CHIPS Act is a horrible, horrible thing. We give hundreds of billions of dollars and it doesn’t mean a thing. They take our money and they don’t spend it,” went Trump’s speech to Congress. “You should get rid of the CHIPS Act and whatever is left over, Mr. Speaker, you should use it to reduce debt.”
The CHIPS and science act was considered a landmark decision that aimed to fund more tech production within the United States. It was enacted by president Biden in 2022 but was a bipartisan bill and received a fair bit of praise. $39 Billion in funds was specifically aimed at subsidising semiconductor manufacturing, including setting up for new types of chips to be made. The goal here was to avoid security risk with foreign made goods with a side benefit of bringing the United States inline or even ahead of industries in places like China and Taiwan, as well as bringing in lots of new jobs for American workers.
Developing technology like this, especially smaller and more capable chips is an arms race. Technology moves at breakneck speeds and every government in the world wants to have a slice of this pie. So much so that Europe even added its own €43 billion Euro CHIPS act a year later in 2023.
This comes amidst the President also announcing new tech tariffs this week, which he believes are more than enough to encourage more U.S based production. “We don’t have to give them money,” said Trump, clearly favouring the stick of taxes over the carrot of investment. The tariffs are designed to tax those using countries with lower cost such as China and Mexico, but are having run off effects to the entire industry. Companies from countries like Japan, who rely heavily on US export, have already been seen stockpiling in the United States in response.
What’s a little confusing about this is the CHIPS act seemed to work. The United States has been able to secure agreements with all of the leading semiconductor producers to open facilities in the country. This includes Micron in New York and TSMC’s investments in Arizona, and Trumps comments haven’t gone unheard with many seeing it as an attack on the industry..
New York Governor, Kathy Hochul, stated that the CHIPS act “is the reason Micron is bringing $100 billion and 50,000 jobs to Central New York. Trump just said he wants to get rid of it.” Arizona representative Greg Stanton called Trump’s words a “direct attack on Arizona’s semiconductor industry and tens of thousands of Arizona workers.” he said, stating that TSMC’s $100 billion investment wouldn’t have occurred without the act.
It’s hard to say what’s going to happen next. According to Reuters sources, close to a third of the staff in the US Commerce Department office that looks after $39 billion of manufacturing subsidies for chipmakers were laid of this week. Even those who’ve already received subsidies are worried, as a month ago, Reuters reported on the Trump administration’s dramatic overhaul of the federal government, which includes reevaluating where the original money had gone.
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Kurt Indovina
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