US CHIPS Act funding again came under attack by President Trump in a Tuesday address to Congress. He said unspent funds from the Act should be used to reduce federal debt.
Potentially, that means an unspent sum of $35 billion, based on industry estimates provided to Fierce Electronics.
“Your CHIPS Act is a horrible, horrible thing,” he said. “We give hundreds of billions of dollars and it doesn’t mean any thing. They take our money and 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.”
The president’s comments all but ensure the CHIPS Act program is dead, if it wasn’t already. The bipartisan measure, signed by President Biden in 2022, was a central achievement of the Biden administration. The office designated to distribute the funds, CHIPS for America, was disbanded in the early days of the Trump administration and former CHIPS Act officials and others do not respond to calls and emails.
Of the $39 billion in CHIPS Act funds earmarked for grants to private companies, industry officials have told Fierce Electronics that just $4 billion has actually been doled out to companies with signed checks. Government officials have not been reached to confirm the $4 billion figure, however.
About $36 billion of the $39 billion had been designated or certified during the closing days of the Biden administration, according to CHIPS Act officials. Commerce Secretary Howard Lutnick refused to say those certified grants should be paid out to companies like Intel and Micron subject to further review. Some reports have estimated $33 billion has actually certified, meaning a legal contract was signed.
All told, the act, approved by President Biden in 2022, provided $52.7 billion in funds, with $2 billion earmarked to Intel for for a defense semiconductor development program and $11 billion for semiconductor research. The law also called for $75 billion in government lending authority and tax credits that a few US companies have already said have benefited their bottom line budgets.
Trump again praised the use of tariffs to encourage companies to build manufacturing facilities for chips and automobiles in the US. Tariffs went into effect on Tuesday of 25% on goods from Canada and Mexico and a 10% tariff on China went into effect atop a previous 10%. As a result, markets dived on Tuesday by 700 points, with Canadian officials promising retaliation.
In one example Trump cited, TSMC has committed $165 billion to build new plants in the US. On Monday, Trump and Lutnick had said the new TSMC commitment was less, a total of $100 billion, but the added $65 billion could be what TSMC had earlier committed to new US-based plants in Arizona. TSMC is already making early production chips for Apple.
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Lutnick on Monday said TSMC is coming to the US “because they have avoid paying tariffs.” So far, Taiwan is not subject to recent tariffs, however. Lutnick said the tariff approach was a far better deal than using the CHIPS Act to reap TSMC’s $65 billion in US manufacturing investment, with TSMC getting $6 billion CHIPS Act grants.
“They didn’t want to pay tariffs,” Trump said, referring to TSMC.
“We will take in trillions” due to tariffs, Trump also declared in the1 hour, 40 minute address. He said tariffs are meant to repair years of tariffs imposed by other countries who have “ripped off” the US. Trump also again raised the use of a gold card concept to raise funds to pay debt, where companies would pay $1 million for a new type of green card to ensure companies needing top talent will be able to provide such professionals a way to work legally in the US.
The president suggested during his address that tariff threats are behind SoftBank’s reason for bringing $200 billion in the US and why Oracle and OpenAI are bringing $500 billion as well. When announced shortly after taking office, SoftBank, Oracle and OpenAI joined Trump to declare a total investment in US construction of data centers in Texas called Stargate of $500 billion, not a combined total $700 billion. Stargate is also designed to support total AI development, including with electricity generation.
RELATED: Stargate joint venture to pump $500 billion in AI infrastructure
Trump also suggested tariffs prompted a $500 billion investment in AI servers and other infrastructure by Apple.
RELATED: Surprise! Facing Trump tariffs, Apple pumps $500B into US manufacturing
CHIPS Act funds were administered by personnel within NIST (National Institute of Standards and Technology) but that CHIPS for America group is defunct under recent cuts to NIST amid widespread federal worker cuts by DOGE and billionaire Elon Musk, according to remaining NIST workers who spoke anonymously to Fierce.
RELATED: CHIPS Act dead? Firings at NIST expected soon, reports say