Donald Trump is fulfilling what he anticipated both during the electoral campaign and after returning to the White House. The Chips Law , approved in July 2022 by the government of Joe Biden, has never sat well with him. He has made this clear in statements like one from last January:
“In the very close future, we will impose tariffs on foreign production of computer chips, semiconductors, and pharmaceutical products to return the manufacture of these essential goods to the US. […] They went to Taiwan; now we want them to return. We do not want to give them billions of dollars in the ridiculous Biden program. They already have billions of dollars.”
Three months prior, in October 2024 , he charged with fervor against this program during the Joe Rogan Podcast : “We put millions of dollars on the table so that rich companies came, they took the money and built chip companies here. And anyway, they will not give us the best companies.”
The Department of Commerce has Seized $7.4 Billion Destined for Chips
During the electoral campaign, the possibility that Donald Trump would dismantle the Chips program if he returned to office was a hot topic. While the money already disbursed may not be retrieved, a portion of the funds remains under the control of the Department of Commerce , now led by Howard Lutnick. The dismantling of the Chips program has already begun.
As we explained last Friday, the US government plans to reassign at least $2 billion from the budget allocated for research and manufacturing of integrated circuits within the Chips Law . If this measure takes effect, these funds will finance projects focused on sourcing and processing critical minerals. Currently, China controls a significant portion of the extraction, processing, and distribution chain of these essential resources, which are vital for various industries, including integrated circuits, telecommunications, batteries, and electric vehicles.
The government plans to redirect at least $2 billion from the budget for the investigation and manufacture of chips.
However, this is not all. The US Department of Commerce has seized a fund of $7.4 billion , originally managed by the National Center for the Advancement of Semiconductor Technology (Natcast) , a private non-profit organization. This funding was sourced from the Chips program and intended for the research and development of new semiconductor technologies.
The Department of Commerce justified this seizure by stating that the establishment of Natcast by the Biden Administration aimed to “avoid clear legal restrictions that prohibit government agencies from creating corporations.” Furthermore, Secretary Lutnick has labeled this organization a “bribe fund,” declaring that it served only to enrich Biden supporters using American taxpayer dollars . A surface-level interpretation of this measure might suggest it primarily affects the US; however, the repercussions will resonate throughout the global semiconductor industry.
American research has historically contributed significantly to the global integrated circuit sector. Thus, the funding cuts within the Chips Law will have noticeable effects industry-wide. A prime example: the extreme ultraviolet radiation source (EUV) used by ASML photolithography equipment was developed by Cymer in the US.
Regarding Natcast’s current role in semiconductor research, we cannot overlook the organization’s involvement in constructing the extreme ultraviolet light accelerator (EUV) in Albany, New York. They are also working on a Chips Research and Development Center in Tempe, Arizona. As of now, the Commerce Department has not clarified what they plan to do with the seized $7.4 billion , leaving the future of New York and Arizona research facilities hanging in uncertainty.
For more information, check out these sources: Reuters | Tom’s Hardware
In conclusion, the developments surrounding these funding reallocations indicate a profound shift within the American semiconductor landscape. The ramifications not only affect those involved in semiconductor research domestically but also cast a long shadow over the global industry, emphasizing the importance of geopolitical relationships in technology and innovation. Such decisions can drastically alter the competitive balance, highlighting the need for strategic foresight in addressing emerging global challenges.