March 12, 2025, 7:38 p.m.
During his joint address to Congress last week, President Trump took a direct shot at the CHIPS and Science Act, a signature accomplishment under President Biden that steered billions into the domestic semiconductor industry in an effort to keep America’s tech advantage over China.
“You should get rid of the CHIPS Act, and whatever is left over, Mr. Speaker, you should use it to reduce debt,” Trump said, to the applause of a small number of Republican lawmakers.
The bill was part of Biden’s chip strategy, which employed a mix of incentives and threats to return high-tech chip manufacturing to the U.S., and created a global coalition that placed chip and chip-related export controls on China. The bill appropriated more than $50 billion for research and development, workforce training, and construction subsidies.
During the election, Trump routinely questioned why incentives were needed, instead favoring tariffs as the main way to fight China. In the meantime, the Chinese tech sector has proven to be more advanced than previously believed.
On the day Trump was sworn into office for his second term, China-based DeepSeek released a chatbot that performed nearly as well as the leading U.S. versions such as ChatGPT, while using significantly less energy and allegedly fewer of the highest-quality Nvidia chips. More recently, China has announced the development of its own extreme ultraviolet lithography machine, or EUV, that may allow the country to start producing its own top-of-the-line chips as early as 2026.
The president’s public criticism of the CHIPS and Science Act—right as China pours more money into tech research and development—seemingly puts two key stated goals of his administration at risk: winning the competition war with Beijing and restoring manufacturing jobs to the U.S.
“It’s a confusing and potentially distressing time” for those who understand the connection between science funding, national security, and economic power, said Sujai Shivakumar, a senior fellow at the Center for Strategic and International Studies.
Sensing potential opposition from the incoming Trump administration, the Biden administration rushed to push the already appropriated CHIPS and Science money out the door before Trump could assume power and stop the payments. In total, the Biden administration finalized $32.54 billion in subsidies. Intel was the biggest winner, having been awarded $8.5 billion, while the Taiwanese Semiconductor Manufacturing Company (TSMC) was awarded $6.6 billion, Samsung $6.4 billion, and Micron $6.14 billion.
It is unclear what power the Trump administration will have to either stop ongoing payments or claw back the money that was already approved but not spent. But the Trump administration has reportedly tried to rein in the CHIPS program.
Last week the Commerce Department fired 40 CHIPS office employees as part of its wider purge of federal workers, The New York Times reported.
Not everyone agrees that Trump will ultimately shutter the program.
Sen. Todd Young, the leading Republican on the CHIPS and Science Act, said he had talked to the White House and was assured that the plan was only to “tweak” the bill rather than scrap it altogether.
“I feel like I've gotten all the reassurances I wanted from [the White House] in recent days, so I feel pretty good about the contemplated tweaks to the program, and I hope to play a leading role in improving the implementation of the CHIPS initiative,” Young told National Journal Wednesday.
Shivakumar said it has been difficult to understand the president’s playbook when it comes to the CHIPS and Science bill.
“We are seeing [the administration] punch the person in the nose, then negotiate with them,” Shivakumar said. “Partially what we are trying to recalibrate ... [is] not to overreact when the administration threatens something in the extreme.”
According to the Semiconductor Industry Association, the CHIPS and Science program has generated more than $540 billion in private investment in the U.S. It’s on pace to create more than 68,000 permanent jobs at the new facilities, another 120,000 construction jobs, and more than 320,000 other jobs throughout the economy.
Many of those jobs are in Republican or battleground states including Arizona, Indiana, Ohio, and Idaho, a factor which Gary Clyde Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, said will likely protect them from being attacked by the Trump administration.
Regardless of Trump’s plan for the CHIPS and Science Act, he has already claimed that his threat of tariffs on the import of semiconductor chips—rather than increased subsidies—has resulted in some success.
On March 3, Trump announced that TSMC will spend $100 billion in the U.S. over the next four years on its chip-fabrication plant in Arizona. While TSMC was a recipient of CHIPS and Science funding for that Arizona fab, the new announcement more than doubled the $65 billion investment commitment TSMC had made to the Biden administration.
While the CHIPS subsidies may not have had a major impact on the company’s most recent announcement, TSMC’s investment stands to benefit from the 25 percent advanced-manufacturing tax credit for investments into projects launched before 2027, a part of the bill Trump has largely been silent on.
Hufbauer co-authored a recent report that estimated those tax credits will likely add up to at least $100 billion for the semiconductor industry, and he sees a future where Trump extends the credits, creating an even larger savings for the industry.
While Trump has railed against the chip subsidies, his administration also reportedly has plans to attack the science portion of the bill that authorized record spending increases to agencies such as the National Science Foundation. While funding for the NSF was largely stagnant—or cut—during the Biden administration, the Trump administration reportedly has plans to slash as much as two thirds of the agency’s $9 billion budget.
All this comes as the Chinese government is planning to increase its science spending and the nation makes technological leaps that many thought were years, if not decades, away.
For those who want the U.S. to remain the world leader on semiconductor chips, experts say one of the more worrisome advancements is that China has reportedly developed its own EUV machine. The machine uses lasers to create extremely small and intricate patterns on semiconductor chips, allowing them to pack in more power per chip.
Currently, the Dutch company ASML has a monopoly on EUV machines, and the Dutch government has placed controls on the company preventing it from selling the equipment to Chinese companies.
But, according to TechPowerUp, Huawei plans to test China’s first EUV machine later this year, with hopes of mass production beginning in 2026.
If those reports are remotely accurate, experts say, it shows China is far closer than previously expected to matching the U.S. and Taiwan’s chipmaking ability.
“My guess is that they will be able to match, or come very close to matching U.S. semiconductor technology within about three or four years,” Hufbauer said. “When countries put their mind to these technological feats, by both their own abilities—China has a lot of scientific and research ability—and by espionage, they can make pretty impressive gains.”
