Taipei, Taiwan – The looming inauguration of President-elect Donald Trump has cast uncertainty over the CHIPS and Science Act, a cornerstone initiative of outgoing President Joe Biden to revitalize semiconductor manufacturing in the United States.
The CHIPS Act, signed into law in 2022, allocated $280 billion to boost domestic semiconductor research and production, including $39 billion in subsidies, loans, and tax credits for US and foreign firms. The legislation garnered bipartisan support, drawing optimism from states eager to attract advanced manufacturing and create jobs.
As Trump prepares to assume office on January 20, the Biden administration is racing to finalize deals with chipmakers and distribute funds under the act. Trump’s recent criticism of the legislation, branding it “so bad” during a podcast appearance, has added to the uncertainty.
“We put up billions of dollars for rich companies,” Trump said, expressing disdain for the subsidies. He has also accused Taiwan, home to the world’s leading semiconductor producer, Taiwan Semiconductor Manufacturing Company (TSMC), of “stealing” the chip industry from the US.
Uncertainty Looms Over Funding Distribution
The CHIPS Act’s funding has already started to flow, with US firms like Intel receiving $7.9 billion in direct support. Asian partners, including TSMC and South Korea’s Samsung and SK Hynix, have also signed agreements. TSMC secured $6.6 billion in grants and $5 billion in loans to construct four facilities in Arizona.
While Trump cannot unilaterally repeal the CHIPS Act, analysts suggest he could delay its implementation. By obstructing fund distribution or renegotiating terms, Trump might seek to reshape the initiative under his administration’s branding, as he did with the US-Mexico-Canada Agreement, which replaced NAFTA.
“What [Trump] really wants is to get his brand on everything,” said Dan Hutcheson of Tech Insights.
Asian Stakeholders Assess Risks
TSMC has moved forward with its US investments, but others have been more cautious. Samsung signed a $45 billion deal in April to expand its Texas facilities, yet progress has stalled. SK Hynix’s plans to build a $3.87 billion facility in Indiana have similarly seen no updates.
Asian countries are also enhancing their domestic chip industries. Taiwan and South Korea have launched subsidy programs, while Japan pledged $65 billion to boost its semiconductor sector. China has earmarked $45 billion to strengthen its chip manufacturing amid US export restrictions.
Yachi Chiang, a professor at National Taiwan Ocean University, suggested that Trump’s administration might pressure TSMC to increase its $65 billion US investment. “Renegotiations could prolong fund distribution or even jeopardize agreements,” said Chim Lee, a senior analyst at the Economist Intelligence Unit.
Regional Politics Add Complexity
Political turmoil in East Asia adds another layer of unpredictability. Taiwan’s President William Lai Ching-te faces opposition control in the legislature, limiting policy flexibility. South Korea’s leadership is in flux, with caretaker Prime Minister Han Duck-soo holding office amid impeachment proceedings against the president. In Japan, Prime Minister Shigeru Ishiba’s minority government faces electoral uncertainty.
Despite these challenges, East Asian leaders remain focused on maintaining strong ties with the US. William Reinsch, an expert at the Center for Strategic and International Studies, highlighted the broader considerations for regional leaders.
“They’ll weigh investment in the US, higher defense budgets, and alignment with US policies on China, not just the CHIPS Act,” Reinsch said.
Taipei has signaled its willingness to engage with Trump’s administration. Shortly after his election, reports surfaced of Taiwan considering a $15 billion arms purchase to demonstrate its commitment to US relations.
As the Trump administration prepares to take the helm, the future of the CHIPS Act—and its impact on the global semiconductor industry—remains shrouded in uncertainty.
December 22, 2024 4:03 pm
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