In a move sending shockwaves through the technology sector, the Trump administration appears poised to dismantle the US CHIPS Act, the landmark legislation designed to revitalize American semiconductor manufacturing. Industry insiders report that the $52.7 billion initiative, formally known as the Creating Helpful Incentives to Produce Semiconductors Act, faces imminent elimination as part of broader policy shifts under the new administration.
The US CHIPS Act was signed into law in 2022 to boost domestic semiconductor manufacturing and reduce America’s dependence on foreign chip production. Now, with reports indicating the CHIPS Act scrapped by the incoming administration, tech companies with billions invested in new American facilities face unprecedented uncertainty.
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Trump Administration CHIPS Act Elimination: What We Know So Far
The Trump administration CHIPS Act policy represents a major shift from previous technology initiatives. According to sources close to the administration, the Commerce Department’s Chip Program Office (CPO) has already seen dramatic staffing reductions, with approximately 120 of 135 employees either laid off or having resigned.
This mass exodus was reportedly orchestrated by Elon Musk’s DOGE (Department of Government Efficiency) division, which has been tasked with restructuring federal spending. The remaining skeleton crew of just 15 employees suggests the program is effectively being wound down.
Former President Trump, now back in office, has previously described the CHIPS Act as a “horrible, horrible thing” and criticized it for giving companies “Biden money.” His administration appears to favor a different approach to attracting semiconductor investment, primarily through tariff threats rather than direct subsidies.
| CHIPS Act CPO Staffing | Number |
|---|---|
| Original staff count | 135 |
| Staff laid off/resigned | 120 |
| Remaining staff | 15 |
“The administration believes tariffs are a more effective tool than subsidies for bringing manufacturing back to America,” said a source familiar with the policy shift who requested anonymity. “This represents a fundamental philosophical difference in economic approach.”
How Semiconductor Manufacturing US Landscape Will Change Without the Act
The future of semiconductor manufacturing US capacity depends heavily on federal support policies. The CHIPS Act was designed to reverse a troubling trend: America’s share of global semiconductor manufacturing had fallen from 37% in 1990 to just 12% today.
Without the promised federal funding, many planned facilities may be scaled back, delayed, or canceled entirely. This could have profound implications for America’s technological leadership and supply chain security.
“The semiconductor industry operates on long-term planning horizons,” explained Dr. Sarah Chen, technology policy analyst at the Brookings Institution. “Policy uncertainty is particularly damaging because these are multi-billion dollar, multi-year investments.”
The elimination of chip manufacturing subsidies would force companies to reconsider expansion plans that were predicated on federal support. This comes at a critical time when global competition for semiconductor manufacturing capacity is intensifying.
| US Semiconductor Manufacturing | Before CHIPS Act | With CHIPS Act (Projected) | Without CHIPS Act (Projected) |
|---|---|---|---|
| Share of global production | 12% | 20% by 2030 | Likely to remain at 12% or decline |
| New fabs planned | 3 | 18+ | Possibly 5-7 |
| Jobs created | – | 115,000+ | Fewer than 30,000 |
Intel CHIPS Act Funding at Risk: Company’s Response and Plans
Intel CHIPS Act funding was expected to exceed $10 billion for new fabrication facilities. The company had already broken ground on a massive $20 billion chip manufacturing complex in Ohio, with plans for up to eight fabs. Intel CEO Pat Gelsinger had called the CHIPS Act “critical” to these expansion plans.
With federal funding now in jeopardy, Intel faces difficult decisions. The company’s stock dropped 7% on news of the potential CHIPS Act elimination, reflecting investor concern about the impact on Intel’s ambitious “IDM 2.0” strategy to reclaim manufacturing leadership.
“We are closely monitoring policy developments and evaluating their potential impact on our investment plans,” an Intel spokesperson said in a statement. “We remain committed to increasing semiconductor manufacturing in the United States, but the scale and pace of our investments necessarily depend on the business environment, including government support.”
Industry analysts suggest Intel may need to scale back its Ohio plans significantly or seek additional private investment to fill the funding gap.
TSMC Arizona Plant Future Uncertain as Policy Shifts
The TSMC Arizona plant construction timeline may face delays with changing federal policies. Taiwan Semiconductor Manufacturing Company, the world’s largest contract chipmaker, had committed to building two advanced fabs in Arizona with a total investment of $40 billion. The company was counting on approximately $6.6 billion in CHIPS Act funding.
TSMC has already begun construction on its first Arizona facility, but the second, more advanced fab may now be in question. The company has reportedly begun consulting with legal advisors about its options regarding commitments made based on expected CHIPS Act support.
“TSMC’s Arizona investment was a major win for US semiconductor policy,” said Mark Liu, semiconductor industry consultant. “If that project scales back, it would be a significant blow to America’s advanced chip manufacturing ambitions.”
The uncertainty extends beyond just TSMC and Intel. Samsung, Micron, GlobalFoundries, and numerous smaller chip companies had all announced expansion plans predicated on CHIPS Act support.
US Semiconductor Policy: Past, Present, and Uncertain Future
Experts worry that US semiconductor policy inconsistency could drive investment overseas. The CHIPS Act represented a rare bipartisan effort to address a critical national security and economic competitiveness issue. Its potential elimination signals a dramatic shift in approach.
“The US-China tech competition intensifies as US policy support for domestic manufacturing wavers,” noted Dr. James Wilson, Senior Fellow at the Center for Strategic and International Studies. “Meanwhile, China, Europe, Japan, and South Korea are all increasing their semiconductor subsidies.”
This policy whiplash creates several challenges:
- Reduced investor confidence in long-term US manufacturing commitments
- Potential advantage for foreign competitors with more stable policy environments
- Continued vulnerability in critical technology supply chains
- Missed opportunity to create high-paying manufacturing jobs
Recent semiconductor industry news has been dominated by uncertainty around federal funding, with companies and industry groups lobbying intensely to preserve the program.
CHIPS Act Implications for Tech Industry and National Security
The CHIPS Act implications extend beyond just manufacturing to national security concerns. Defense officials have repeatedly warned that dependence on foreign-made semiconductors, particularly those from geopolitically sensitive regions, represents a strategic vulnerability.
“Domestic semiconductor production currently accounts for only about 12% of global capacity,” explained Retired General Robert Stevens, former advisor to the Pentagon on technology security. “Without the CHIPS Act, we risk continued dependence on potentially vulnerable supply chains for technologies critical to our military systems.”
Many CHIPS Act investments were already in progress when news of potential repeal emerged. Companies had begun hiring, purchasing equipment, and breaking ground on new facilities. The sudden policy shift creates significant disruption and potential legal challenges.
FAQs :
What exactly is the US CHIPS Act?
The US CHIPS Act (Creating Helpful Incentives to Produce Semiconductors Act) is legislation passed in 2022 that allocated $52.7 billion to boost domestic semiconductor manufacturing and research. It included $39 billion for manufacturing incentives, $13.2 billion for R&D and workforce development, and a 25% investment tax credit for chip plants.
Why is the Trump administration considering scrapping the CHIPS Act?
The Trump administration has expressed philosophical opposition to direct industry subsidies, preferring instead to use tariff threats to encourage domestic manufacturing. Former President Trump has previously called the CHIPS Act a “horrible, horrible thing” and criticized it for giving companies “Biden money.”
How much money has already been allocated under the CHIPS Act?
As of early 2025, approximately $28 billion had been committed to various projects, though most of this funding had not yet been disbursed. Major recipients included Intel, TSMC, Samsung, and Micron.
What happens to companies that were counting on CHIPS Act funding?
Companies that made investment decisions based on expected CHIPS Act support now face difficult choices. They may need to scale back projects, seek alternative funding, delay construction, or in some cases, potentially cancel planned facilities. Some companies are consulting with legal advisors about potential recourse.
How does this affect America’s competition with China in semiconductors?
China has committed over $150 billion to developing its domestic semiconductor industry. Without the CHIPS Act, the U.S. may find it more difficult to compete for new semiconductor manufacturing capacity, potentially allowing China to gain ground in this strategically important technology area.
Will this affect consumer electronics prices?
In the short term, the impact on consumer electronics prices is likely to be minimal. However, in the longer term, reduced domestic manufacturing capacity could leave the U.S. more vulnerable to supply chain disruptions, which have previously led to price increases and shortages.
What’s Next for US Semiconductor Manufacturing
As the industry grapples with this policy upheaval, several key developments bear watching in the coming weeks:
- Legal challenges from companies that made investments based on promised funding
- Congressional response, including potential legislative efforts to preserve elements of the program
- State-level incentives that might partially offset the loss of federal support
- Industry consolidation as smaller players struggle without expected subsidies
The semiconductor industry, accustomed to long-term planning horizons, now faces a period of exceptional uncertainty. For American technological leadership and supply chain security, the stakes could hardly be higher.
The 25% ITC dwarfs the grant dollars. Tax strategy, maintaining the ITC, coupled with tariffs could be very effective.