President Trump threw the future of the $52.7 billion CHIPS Act into question during his joint address to Congress on Tuesday, saying it was a “horrible, horrible thing” and telling House Speaker Mike Johnson to “get rid” of the legislation and use the remaining cash to reduce debt or “any other reason you want to.”
The comments came as a shock, as the Commerce Department has already allocated or paid out some $36 billion of the funds related to the act for projects across the country.
But according to a source familiar with the CHIPS Act, Trump’s comments were off the cuff and there are currently no plans to kill the bipartisan law, which was passed and signed into law by former President Joe Biden in 2022.
According to the source, while Trump’s statement was concerning, the current budget proposal doesn’t include any information that would indicate the CHIPS Act is in danger of being repealed. What’s more, there’s no political appetite for such a move.
The law, which was put into place following the chip shortages during the COVID-19 pandemic, is meant to bring chip manufacturing back to the US. According to the National Institute of Standards and Technology, the US accounts for just 10% of the world’s chip production.
According to a 2020 report by the Semiconductor Industry Association, 75% of the world’s modern chip fabrication facilities are based in Southeast Asia. Reshoring manufacturing would provide the US with a more robust supply of semiconductors that companies could pull from in the event of another major supply chain disruption like the pandemic, natural disasters, or wars.
Repealing the CHIPS Act would take an act of Congress, and while Republicans hold a majority in both houses, it’s slim. GOP senators and representatives from states that directly benefit from the CHIPS Act would have to expend a good deal of political capital to go along with killing a law that creates new jobs for their constituents.
Trump has previously toyed with the idea of repealing the CHIPS Act and levying tariffs on semiconductors built overseas as a means of forcing companies to bring manufacturing back to the US.
During his speech, Trump touted TSMC’s plans to spend $165 billion to construct new chip facilities in Arizona. But $6.6 billion of the funding for the project will come in the form of grants via the CHIPS Act.
Trump’s abrupt mention of killing the CHIPS Act comes as his administration looks to slash spending across the government via the Department of Government Efficiency (DOGE).
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on X at @DanielHowley.
