As part of his address to Congress this week, President Donald Trump made clear that he wanted to cancel the $52.7 billion CHIPS and Science Act, which semiconductor manufacturers have relied on for funding expansion projects across the country.
Trump on Tuesday evening criticized the law, calling it a “horrible, horrible thing” that gives large sums of money to companies who don’t spend it. He urged House Speaker Mike Johnson to get rid of the CHIPS Act and to use “whatever’s left over to reduce debt or any other reason you want to.”
The president’s comments received muted applause on the Congressional floor, perhaps because the bill is supporting industry growth in several Republican-led states, including Texas and Ohio. It also would require an act of Congress to fully defund such a law, and at this point, getting enough votes could be a tall order.
Despite Republicans having a majority in the House and Senate, Jack Gold, founder and principal analyst at J. Gold Associates, said the move would be very unpopular, with states losing billions of dollars in the process.
Since 2022, the CHIPS Act has funded $30.6 billion in grant awards to 19 companies with projects in several states. The funds are also expected to create 145,000 manufacturing and construction jobs, according to the Semiconductor Industry Association, which support the surrounding local economies in the form of housing, restaurant visits and more.
While it may be a tough sell to get Congress on board with the president’s vision, Gold said Trump could also slow funding down via layoffs at the National Institute of Standards and Technology, the group responsible for dispersing the CHIPS funds.
NIST has been bracing for job cuts for weeks, Axios reported, with the Department of Government Efficiency targeting about 500 staffers, including at least three lab directors.
Multiple former staffers with the CHIPS for America program have posted about layoffs on LinkedIn. About 40 employees connected with the program were laid off this week, Reuters reported, with another 20 leaving under the government’s deferred resignation program.
The Commerce Department could not be immediately reached for comment on the layoff news.
“If money’s allocated, but there’s no one to distribute it, then you know, it’s in a black hole. What happens to it — who knows?,” Gold said.
Without these incentives, he said it will be difficult for companies to find replacement funds, which could result in delays. Intel, for example, has struggled with revenue as competitors Nvidia and AMD take up more market share, particularly in the artificial intelligence space.
Financial restrictions have limited Intel’s ability to move forward with its expansion plans. Last week, the company updated investors that it would delay its Ohio One fab project, which broke ground in 2022, by another five years to 2031. The New Albany, Ohio-based project has received $1.5 billion in direct funding from the CHIPS Act. Similar fab projects have received billions of dollars in incentives, with other projects earning millions or hundreds of thousands of dollars.
In general, Gold said Intel, Global Foundries, Samsung and others looking to expand semiconductor production in the U.S. base their commitments on how much money they believe they are going to get from the federal government. Without the grants, he said, companies run a serious financial risk.
In the scenario where companies are promised billions of dollars, and somehow the CHIPS act is defunded or the government doesn’t distribute the funds, Gold said to expect lawsuits.
“What I’m really concerned about is that business is now being decided politically rather than strategically, and so it’s not just the CHIPS Act. We’re going to see this across the board on all kinds of stuff,” he said.
