Last week, US President Donald Trump called on republican legislators until the dismissal of chips and science systems, which was adopted during the previous Biden administration, because he considers it a loss of taxpayers’ money. Republican legislators were not enthusiastic about this proposal, because their districts used investments already made by leading squirrel producers. In addition, the US government is legally obliged to distribute the already assigned funds ($ 39 billion), so leading companies that plan to build FAB in the US will receive money.
Supporting this restraint, Bloomberg He recalled the earlier prediction of the semiconductor industry association that the share in the American market on the semiconductor market would drop below 10%, were it not for the Chips and Science Act. This suggests that Trump’s administration probably thought twice before withdrawing the law.
$ 450 billion
The Act on chips and sciences, adopted in 2022 as part of President Biden, is a strategy worth $ 52 billion to strengthen American production of semiconductors and reduce dependence on Asian suppliers. The Act provides a subsidy of $ 39 billion to raise the production of chip production, $ 11 billion for research and development, and 25% of the tax relief for production projects. Companies can also access $ 75 billion in loans and warranty.
It is forecasted that the tax relief will cost over $ 85 billion in government revenues, exceeding the original estimates and reflecting significant levels of investment. Trump claims that tariffs would better encourage domestic investments while generating federal revenues and plans to introduce novel tariffs for the import of semiconductors by April 2025. Some believe that the TSMC obligation in investing an additional $ 100 billion in the American campus was a way to avoid applying tariffs to Taiwan.
However, the introduction of the law has already caused almost $ 450 billion in private investments by leading semiconductor companies, including Intel, Globalfoundries, Micron, Samsung, SK Hynix, Texas Instruments and TSMC to mention only a few. To secure their subsidies and tax breaks, these companies have signed contracts with the federal government and must comply with a number of regulations. However, TSMC’s involvement seems to be a plan that may change and is not legally binding.
Political obstacles
The repeal of the chips act faces political obstacles. This has passed with double -sided support, and many republican districts were selected for financed factories. Full repeal is unlikely, taking into account the narrow republican majority in the Chamber and the likelihood of democratic opposition in the Senate.
Despite the difficulties in repealing the act, the Trump administration may try to change certain provisions. Potential changes include removing requirements for delivery or environment. Adjusting reference points to funds or a change in the terms of the contract can also be used to change the impact of the program.
Although changes in individual agreements are possible, the Trump administration remains legally obliged to distribute $ 39 billion allocated to September 2026. Some contracts allow the government to delay or recover funds under certain conditions, but in general, the administration has restricted power to significant disturbance of financing without congress operation.
To overcome these restrictions, the administration may consider more gentle changes, such as removal of requirements such as children’s care facilities in production places. This approach can offer a political win, avoiding solemn interference. However, companies warn the renegotiations of contracts that can delay projects or reduce funding.
In addition, changes can be arduous to apply and renegotiate in a timely manner. The US Trade Department, which supervises the law on systems, lost about 40% of the workforce due to federal staff cuts. However, according to Bloomberg, the key teams managing the negotiations and financing payments have been largely preserved to ensure continuity of implementation.
