Trump Administration Reevaluates CHIPS Act Grants, Potentially Delaying Semiconductor Funding: Report

The U.S. CHIPS and Science Act 2022 awards are reportedly up for renegotiation by the White House, which could result in a delay in some semiconductor disbursements.

What Happened: The new administration of President Donald Trump is scrutinizing projects granted under the 2022 law, which aimed to strengthen U.S. domestic semiconductor production with subsidies worth $39 billion. The government is planning to reevaluate and adjust current requirements, leading to a renegotiation of some agreements, Reuters reported on Friday.

The exact nature of the potential changes and their impact on already finalized agreements remains uncertain. Reports indicate that the White House has expressed concerns over several terms of the U.S. CHIPS and Science Act industry subsidies. These include additional clauses introduced under former President Joe Biden, requiring recipients to use unionized labor for factory construction and support affordable childcare for factory workers.

The Trump administration has also expressed dissatisfaction with companies that received CHIPS Act subsidies and later announced major overseas expansion plans, including in China. Notably, Intel INTC revealed a $300 million investment in a Chinese assembly and test facility in October, following a significant CHIPS Act award in March.

Leah Peng from GlobalWafers, a major Taiwanese silicon wafer supplier, told Reuters, "The CHIPS Program Office has told us that certain conditions that do not align with President (Donald) Trump’s executive orders and policies are now under review for all CHIPS Direct Funding Agreements."

SEE ALSO: Warren Buffett’s Berkshire Hathaway Sells Nearly $36 Million Worth Of Dialysis Giant DaVita’s Shares Amid Q4 Earnings Beat

Why It Matters: The renegotiation of the U.S. CHIPS and Science Act awards could lead to major changes to the operations of not only the U.S. but also the global semiconductor sector. The adjustments to the current requirements could significantly impact the companies that have already finalized agreements under the Act. The extent of these changes and their potential impact remains to be seen.

In January, the Peterson Institute for International Economics found out that the CHIPS and Science Act would create nearly 93,000 jobs in the construction sector and 43,000 permanent jobs in the U.S. However, the report revealed that each job generated will require approximately $185,000 annually from taxpayers.

President Trump has always contended that imposing tariffs on foreign chips, rather than providing subsidies to boost U.S. production, was the better approach. However, Peterson researchers wrote "There is no compelling reason why a comparable tariff would prove more successful for the United States,'' citing the example of the European Union. The researchers highlighted that the EU tariffs had been unsuccessful in revitalizing chip production in Europe.

• READ MORE: Cathie Wood Dumps More Palantir Amid Stock’s Red-Hot Rally, Robinhood Also Gets The Chop — Ark Adds AMD And TSMC Stock

Image via Shutterstock

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.