Calling it a waste of taxpayer money, Donald Trump urges the repeal of Biden’s CHIPS and Science Act, while some defend its potential to revitalise US semiconductor manufacturing.
On Tuesday, in a speech to Congress, President Donald Trump strongly criticised the CHIPS and Science Act, a major piece of legislation enacted in 2022 to boost US semiconductor manufacturing.
Trump reportedly labelled the Act a “horrible, horrible thing,” accusing lawmakers of wasting taxpayer money. He called for the law to be repealed, suggesting that any remaining funds should be redirected towards reducing the nation’s debt.
“We give hundreds of billions of dollars, and it doesn’t mean a thing. They take our money and they don’t spend it,” Trump said.
The comments came just days after Taiwan Semiconductor Manufacturing Company (TSMC) announced it would increase its investment in the US by $100 billion to build five new chip fabrication plants on American soil.
This was seen as a step forward in US efforts to revitalise its semiconductor sector, which has become increasingly reliant on foreign manufacturers, particularly from Taiwan.
The CHIPS Act, signed into law by President Joe Biden in August 2022, aimed to reverse the trend of offshoring semiconductor production. It allocated $53 billion in federal subsidies for domestic semiconductor manufacturing and research, with $39 billion designated for the construction of new manufacturing facilities. The law also offers a 25 per cent tax credit to companies investing in the industry.
However, Trump and some Republicans have voiced strong opposition, arguing that such subsidies represent a waste of public funds. Instead, they propose using tariffs as a means to achieve the same goals while also contributing to government revenue.
Semiconductors are essential components in modern technology, from smartphones and household appliances to advanced military systems. Despite their importance, the US has seen its share of global semiconductor production decline dramatically in recent decades, falling from 40 per cent in 1990 to just 12 per cent today.
According to an analysis by the Indian Express, Taiwan now produces more than 60 per cent of the world’s semiconductors, including over 90 per cent of the most advanced chips.
Critics of the CHIPS Act, including Trump, argue that the law fails to deliver tangible results. Besides Trump, some Republicans have criticised the “social” provisions of the Act, which include labour-friendly regulations and environmental requirements.
However, some strongly defend the law, citing its potential to create jobs and reinvigorate the US economy. New York Governor Kathy Hochul, for instance, pointed out that the CHIPS Act is the reason why Micron is investing $100 billion and creating 50,000 jobs in Central New York. According to Hochul, Trump’s call for the repeal of the law could undermine these potential benefits.
As the debate over the CHIPS Act continues, its future remains uncertain, particularly concerning the potential impact on grant agreements and ongoing investments from major players like TSMC and Micron.
Despite the disagreements, the Act represents a significant effort to restore US leadership in semiconductor manufacturing.
