Trump Declares War On The CHIPS Act, Calling It A 'Horrible' Waste Of Government Money

President Donald Trump has ramped up efforts to dismantle policies introduced under Joe Biden, with his latest target being the CHIPS and Science Act, a £41.05 billion ($52.7 billion) initiative designed to revitalise domestic semiconductor manufacturing. In his latest speech to Congress, Trump branded the Act a 'horrible' financial burden, calling for its immediate termination and redistribution of its funds towards reducing national debt, according to Reuters.

'It Doesn't Mean a Thing': Trump's Attack on CHIPS Act

In a scathing address, Trump criticised the CHIPS Act, questioning its financial allocations and effectiveness.

'Your CHIPS Act is a horrible, horrible thing. We give hundreds of billions of dollars, which doesn't mean a thing. They take our money, and they don't spend it. You should get rid of the CHIPS Act and whatever is left over, Mr. Speaker, you should use it to reduce debt,' Trump stated.

He further argued that new tariffs alone would be sufficient to persuade companies to build semiconductor factories in the United States, eliminating the need for federal subsidies.

Mass Layoffs Amid CHIPS Act Uncertainty

Trump's attack comes just a day after a third of the CHIPS Act's workforce was laid off, with 40 employees dismissed and 20 others leaving under the government's deferred resignation programme, per Reuters. The resignations included Todd Fisher, the CHIPS Office's Chief Investment Officer, who stepped down last week.

While the move has sent shockwaves through the semiconductor industry, reactions remain divided. New York Governor Kathy Hochul, a Democrat, defended the Act, arguing that it was instrumental in securing £77.90 billion ($100 billion) in investments from Micron, bringing 50,000 jobs to Central New York.

Conversely, Commerce Secretary Howard Lutnick acknowledged the Act's benefits but suggested the Trump administration should review contracts awarded under Biden, hinting at possible restructuring rather than outright elimination.

What is the CHIPS Act?

Signed into law in August 2022, the CHIPS and Science Act aimed to strengthen domestic semiconductor production and reduce reliance on foreign suppliers. The legislation allocated £41.05 billion ($52.7 billion) for the sector, with £30.38 billion ($39 billion) earmarked for manufacturing incentives and £8.72 billion ($11.2 billion) for research and development.

As of August 2024, the Department of Commerce reported that £23.37 billion ($30 billion) had been distributed, funding 23 projects across 15 states and creating 115,000 jobs in manufacturing and construction.

Industry Response and Potential Consequences

Major semiconductor firms have responded positively to the Act, with Taiwan Semiconductor Manufacturing Company (TSMC) committing £77.90 billion ($100 billion) to expand U.S. operations, including the construction of advanced fabrication plants and research centres. Similarly, Intel and Samsung have made significant investments to establish new U.S. manufacturing facilities.

Should Trump dismantle the CHIPS Act, the U.S. semiconductor industry could face severe setbacks. A repeal could lead to halted projects, reduced investments, and a loss of jobs in key technology hubs.

Historically, America's share of global semiconductor production has declined from 37% in 1990 to just 12% today, largely due to a lack of government incentives, per Boston Consulting Group. Removing the CHIPS Act's financial backing could further weaken America's technological self-sufficiency, making the nation increasingly dependent on foreign suppliers, particularly China, which continues to heavily invest in its semiconductor sector.

As Trump pushes to scrap the CHIPS Act, industry leaders, policymakers, and economists remain sharply divided on whether the move will streamline government spending or cripple U.S. innovation in a rapidly advancing global market.