The Biden administration is racing against time to finalize agreements under the CHIPS Act before Donald Trump assumes office, as his administration is expected to have a different approach to semiconductor policy. The CHIPS Act, signed into law by President Joe Biden in 2022, allocated significant funds to bolster domestic semiconductor manufacturing and research, with a total of $39 billion in manufacturing incentives and an additional $13.2 billion earmarked for workforce development. The aim of the act was not only to create jobs within the United States but also to secure critical supply chains and reduce reliance on overseas advanced chip supplies, particularly from Taiwan, where over 90% of the allocation has been reported.
Despite the ambitious goals of the CHIPS Act, the Biden administration has struggled to solidify agreements with chip manufacturers. Although funds have been allocated to 24 semiconductor companies, only a fraction, amounting to approximately $6.6 billion in combined funding, has resulted in binding agreements. This situation creates a sense of urgency for the administration, as delays in finalizing agreements could hinder progress if the incoming Trump administration opts for a shift in policy favoring tariffs over subsidies.
Recent developments include the announcement made by the Commerce Department on November 15 regarding a finalized $6.6 billion subsidy for Taiwan Semiconductor Manufacturing Company (TSMC). Part of this funding is expected to be distributed by year-end. The administration views finalized agreements as critical to locking in funding before Trump takes office. Once an agreement is secured, it becomes a binding contract, making it difficult for any future administration to rescind the funds without congressional involvement should companies remain compliant with the terms established.
In stark contrast to the Biden administration’s strategy, Trump has expressed skepticism about subsidizing chipmakers through the CHIPS Act. In interviews, he suggested that implementing tariffs could have been a more effective strategy to drive investment in domestic chip production. Republican leaders, including House Speaker Mike Johnson, have hinted at efforts to modify the CHIPS Act, indicating a preference for reducing regulations perceived as costly and potentially hindering manufacturing. Trump’s administration is expected to favor trade restrictions over subsidies, signaling a fundamental shift in approach that could collide with the ongoing efforts of the current administration.
Industry insiders, such as Jeff Koch from the semiconductor consulting firm SemiAnalysis, believe that while a direct repeal of the CHIPS Act by the Trump administration is unlikely, a slowdown in the disbursement of funds may occur. The urgency felt by the Biden administration in accelerating the finalization of agreements reflects a concern that a shift in policy could delay or complicate access to crucial funding that supports the U.S. semiconductor sector.
Challenges in cementing additional CHIPS Act agreements have emerged due to negotiations regarding performance benchmarks that companies like Intel must meet to access funding. Intel’s CEO, Pat Gelsinger, has voiced frustrations over the slow pace of fund distribution, revealing a disconnect between the urgency felt by the Biden administration and the realities of the bureaucratic processes involved. As the clock ticks towards a change in administration, the semiconductor industry remains in a state of anticipation, weighing the implications of policy shifts that could reshape the landscape of U.S. chip manufacturing.
