Trump's call to discard the 'horrible' chip program spreads panic

When President Trump went to Congress last week, he diverted from the script to attack a delicate issue, the Chips Law, a bipartisan law aimed at making the United States depend less on Asia for semiconductors.

Republican legislators had sought and received guarantees in recent months that the Trump administration would support the program that Congress created. But in the middle of Mr. Trump's comments, he called the law as “something horrible and horrible.”

“You should get rid of Chip's law,” President Mike Johnson told President while some legislators applauded.

The Chips program was one of the few things to join a large part of Washington in recent years, since legislators on both sides of the corridor worked with private companies to write a bill that would channel $ 50 billion to rebuild the US semiconductor industry. UU. After President Joseph R. Biden Jr. signed it in 2022, the companies found places in Arizona, New York and Ohio to build new factories. The Commerce Department examined those plans and began to distribute billions of dollars in subsidies.

Now, Mr. Trump threatens to fly years of work. The executives of the Chips Company, worried that the funds can be recovered, call lawyers to ask what room the administration has to terminate the signed contracts, eight people familiar with the applications said.

After the speech, Senator Todd Young, the Indiana Republican who defended the chips, said he approached the White House to seek clarity about Mr. Trump's attack because the criticisms were “in tension” with the previous support of the administration.

“If you need to transform into a different model for a period of time, I certainly support me,” said Young last week. “But let's be clear, the law of chips and sciences, at least the portion of chips, has been mainly implemented. It has been one of the greatest successes of our time. “

The United States was a pioneer in the semiconductor industry, designing the first microchips and the processes to do them, which allows to become an early technological leader. But in the 1980s, companies began to outsource most of the production to Asia.

American legislators began to press to rebuild the production of national chips after the pandemic created a global chips scarcity that forced some US car factories. UU., Divided into the Chips Law.

But the Trump administration has already taken measures to reduce the program.

At the end of February, Michael Grimes, a senior official of the Department of Commerce and former investment banker of Morgan Stanley, conducted short interviews with employees of the Chips program office, which supervises the subsidies.

In the interactions that some described as “degrading”, Mr. Grimes asked employees to justify their intellect by providing results of the SAT test tests or an intellectual coefficient, four people familiar with the evaluations said. Some were asked to make mathematical problems, such as calculating the value of four to the fourth power or the long division.

Last week, the Department of Commerce dismissed 40 of the employees of the Chips office, almost a third of the entire team, these people said.

The administration has also begun to discuss changes in projects that received chip -related subsidies, according to three people familiar with internal conversations. The Biden administration granted a preferential treatment for receptors who hired unionized construction workers and provided child care to employees, guidelines that could be changed, people said.

Reviews and dismissals were previously reported by <a target="_blank" class="css-yywogo" href="https://www.reuters.com/technology/trump-prepares-change-us-chips-act-conditions-sources-say-2025-02-13/” title=”” rel=”noopener noreferrer” target=”_blank”>Reuters and CNBC.

On Wednesday, the day after Mr. Trump's speech, the semiconductor industry association organized a call with member companies, said three people familiar with the discussion. During the call, people attributed Mr. Trump's frustration with the law to personal Animus with Mr. Biden.

Some said that Mr. Trump's criticism could create challenges attracting public attention to their projects, according to people. But many also expressed their confidence that their legal agreements with the Department of Commerce could not change.

The semiconductor industry association declined to comment.

Until now, the Commerce Department has signed contracts to grant more than $ 36 billion in federal subsidies under the Chips Law. Samsung, Intel, Micron, Taiwan Semiconductor Manufacturing Company, known as TSMC, and others in response have pledged to invest hundreds of billions of dollars in US chip manufacturing facilities. UU.

Trump has proposed to replace those incentives with tariffs that increase the cost of doing chips abroad. On Tuesday, he said that the threat of tariffs had forced TSMC, the largest advanced semiconductor manufacturer in the world, to increase his US investment by $ 100 billion and double the number of plants he is building in Arizona, six.

“We don't have to give them money,” Trump said. “We just want to protect our businesses and our people, and they will come because they will not have to pay tariffs if built in the United States.”

It is not clear how much factor rates they work in the TSMC plans. The company had already acquired land and wrote plans to expand its footprint in Arizona once it had customers to support three additional floors, three people familiar with the Chips Law said. TSMC is investing before planned, partly because clients like Apple and Nvidia pledged to buy more American manufacturing chips, people added.

TSMC and Intel declined to comment. Micron and Samsung did not respond to requests for comments.

The lawyers and industry executives have said that tariffs on chips themselves are not very effective because the United States imports few chips directly. Chips are generally sent directly to electronics, usually in Asia, where laptops, cell phones and appliances are placed before importing to the United States.

Some in the chips industry have been formulating plans to try to convince Mr. Trump of the value of the law from the elections, even at the annual industry meeting in San José, California, in November. The initial legislation was partially stimulated by an application of officials during the first Trump administration that TSMC invests in the United States, which initiated an effort of the congress to ensure funds for the company.

That soon became a broader effort to finance the industry, since other companies and legislators wanted to participate.

“We need to go and make sure that our colleagues in Washington remember that, adopt that and continue investing in our incredible industry,” said Deirdre Hanford, executive director of Natcast, a non -profit organization created by chips to supervise the development of semiconductor technology, in the industry event last year.

The risk of losing funds has caused some industry executives to complain that the government was too slow to provide subsidies first. While the law entered its place in August 2022, the Biden administration spent months carefully detecting each project. Most of his greatest grants were completed after the elections.

“Is it perfect? No, ”said Senator Mark Warner, a Democrat from Virginia, during a Washington technology and technology conference last week. “But without it, there would have been no other manufacturing installation built in the United States.”