In a fiery address to Congress on March 4, President Donald Trump lambasted the CHIPS and Science Act, a landmark $52.7 billion bipartisan bill signed by his predecessor, Joe Biden, in August 2022. Trump labeled the legislation a "horrible, horrible thing" and urged lawmakers to repeal it, suggesting that the funds should instead be used to reduce the national debt. His remarks have cast uncertainty over the future of major semiconductor investments in the U.S., particularly for industry giants like TSMC, Intel, and Samsung.

The CHIPS Act, designed to bolster U.S. semiconductor manufacturing and reduce reliance on foreign chips, includes $39 billion in direct subsidies for domestic chip production, along with $75 billion in low-interest loans and a 25% investment tax credit. Before leaving office, the Biden administration finalized over $33 billion in awards, including $6.6 billion for TSMC, $7.86 billion for Intel, and $4.745 billion for Samsung. These agreements were intended to support the construction of new semiconductor facilities in the U.S., with TSMC alone planning to invest $65 billion in Arizona and an additional $100 billion to expand its operations.

However, Trump has long been critical of the subsidies, arguing that tariffs, not financial incentives, should be used to encourage foreign chipmakers to build U.S. factories.

"We don't have to give them money," Trump said during his speech. "They don't need money; they need incentives. And the incentive is they don't want to pay 25%, 50%, or even 100% tariffs."

He emphasized that companies like TSMC should use their own funds to build facilities rather than relying on U.S. taxpayer dollars.

Trump's stance has raised concerns among industry leaders and lawmakers. TSMC, which has already received $1.5 billion of its $6.6 billion award, could face significantly higher manufacturing costs in the U.S. if the subsidies are revoked. According to industry estimates, building a chip factory in the U.S. is already 50% more expensive than in Taiwan, with labor and infrastructure costs driving up expenses. Without the CHIPS Act subsidies, TSMC may need to raise prices for advanced chips by up to 15% to offset these costs, potentially passing the burden onto consumers.

The uncertainty surrounding the CHIPS Act has also led to upheaval within the U.S. Commerce Department, which oversees the subsidy program. Approximately one-third of the staff in the office responsible for distributing the $39 billion in manufacturing incentives were laid off this week, signaling potential disruptions to the program's implementation.

Despite Trump's criticism, some lawmakers and industry stakeholders have defended the CHIPS Act, arguing that it has already spurred significant investments and job creation. New York Governor Kathy Hochul highlighted that Micron's $100 billion investment in Central New York, which is expected to create 50,000 jobs, was made possible by the legislation. Similarly, Representative Greg Stanton of Arizona warned that repealing the act would harm the state's semiconductor industry and jeopardize tens of thousands of jobs.

As the debate over the CHIPS Act continues, the future of U.S. semiconductor manufacturing hangs in the balance. While Trump's tariff-driven approach may appeal to some, the potential loss of subsidies could deter foreign investment and drive up costs for both manufacturers and consumers. With the global semiconductor industry at a crossroads, the U.S. faces a critical decision: whether to double down on financial incentives or pivot to a more protectionist strategy.