Is the End Near For The U.S. CHIPS Act?
The program is in limbo, if not on life support.
By Mark LaPedus
The U.S. CHIPS and Science Act, the program designed to boost chip production in the United States, appears to be in trouble.
The Trump administration has made no official announcement about the status of the CHIPS Act, but there are signs that the government could make some major cuts in the program. It could even scrap most, if not all, of the program.
The Trump administration is seeking to renegotiate CHIPS funding awards at various companies “and has signaled delays to some upcoming semiconductor disbursements,” according to a recent report from Reuters. But sources said that the Trump administration has fired around 75% of the employees in the CHIPS Program Office. The program is basically in tatters and without the means to administer any funding.
Meanwhile, in recent times, many companies and R&D entities were awarded CHIPS funding. But most have yet to obtain any actual funds. Still, many entities are moving forward with their CHIPS-related programs--even though they haven’t obtained any funding. Other projects have slowed or grinded to a halt.
All told, the future of the CHIPS Act appears to be in limbo, if not on life support. “It’s in limbo,” said Dan Hutcheson, vice chair and senior research fellow at TechInsights, a research firm. “The question is (whether) it’s the walking dead or can it be revived?”
Another analyst summarized the status of the CHIPS Act, saying: “It’s dead.”
At this week’s SPIE Advanced Lithography conference in San Jose, Calif., members of one of the programs in the CHIPS Act were spotted in the “NYCreates” booth in the exhibition center. The official from one of the programs declined to comment on the CHIPS Act, saying that ‘‘it’s business as usual.’’ The official referred all inquiries to the CHIPS Program Office.
Representatives from CHIPS Act and the Department of Commerce did not return e-mail inquiries. The CHIPS Program Office sits under the National Institute of Standards and Technology (NIST) at the U.S. Department of Commerce.
If the Trump administration were to make major cutbacks in the CHIPS program—or repeal it--this would represent a major blow for the U.S. semiconductor industry. And in contrast, other nations with similar efforts continue to move full speed ahead with their respective semiconductor initiatives.
What is the CHIPS Act?
Officially launched by the Biden administration in 2022, the U.S. CHIPS Act is designed to expand chip and packaging production in the United States. The program set aside $39 billion in grants for manufacturing and $11 billion in funding for R&D and workforce development.
In 2023 and 2024, several companies and research entities were awarded CHIPS funding in one form or another. TSMC, Intel and a few others obtained actual funds, but many others were (and still are) on the waiting list.
Then, in November 2024, Donald Trump was elected president of the U.S. For some time, President Trump has been critical the CHIPS Act. “The administration doesn’t like the CHIPS Act,” Hutcheson said. “They say it’s a waste of money. The administration feels like they can solve the problem with tariffs.”
A tariff is a tax levied by a government on the value of imported products. In theory, the Trump administration believes that tariffs make more sense than a subsidized program like the CHIPS Act. “(Trump) claims it would be better to tariff the chip companies so high that they have no choice but to build in America without the government paying them,” according to a recent analysis from Counterpoint Research.
There is little to no evidence that this strategy would even work, however. On the other hand, there is a possibility that some CHIPS-related semiconductor projects will obtain funding in the future, namely those that are located in states with Republican governors. Projects in states with Democratic governors could find themselves on the chopping block. (President Trump bills himself as a Republican.)
Not all government funding has dried up, however. Some U.S. states have their own versions of the CHIPS Act, albeit at a much smaller scale. In 2023, for example, Texas established the Texas CHIPS Act. As part of the program, the state also formed the Texas Semiconductor Innovation Consortium (TSIC) and the Texas Semiconductor Innovation Fund (TSIF).
Silicon Labs recently announced the award of a $23 million grant from the TSIF. The investment will support a new R&D laboratory in Austin, Texas.
EU CHIPS Act thrives
Besides the U.S., the European Union (EU), India, Japan, Korea and other nations have their own versions of the CHIPS Act.
Other nations aren’t throwing in the towel regarding their respective chip funding efforts. In fact, the EU is still committed to its own version of the CHIPS Act. Announced in 2022, the European Chips Act involves a $47 billion program to strengthen the EU’s semiconductor ecosystem. As part of the plan, the EU also hopes to boost Europe’s share of semiconductors from 8% in 2021 to 20% by 2030.
With the funding, the EU has launched several chip pilot lines. Recently, the EU has provided funds for the APECS pilot line project, which is involved in advanced packaging.
Then, in a separate effort, the European Commission under the EU CHIPS Act has recently approved funding for Infineon’s fab in Dresden, Germany.
Earlier this year, China established a $47 billion semiconductor investment fund to propel the development of the domestic chip industry. Over the years, the China government has poured $150 billion in its semiconductor industry.