Trump's Attempt to Repeal the CHIPS Act and Potential Consequences

US President Donald Trump last week called for the repeal of the CHIPS and Science Act, characterizing it as a "terrible, terrible thing" in an address to Congress. The President claimed the legislation distributed large sums of money to corporations that have not spent the funds, and suggested that remaining funds under the law be used to reduce the deficit or for other purposes.

The CHIPS and Science Act, enacted in 2022 with a budget of 52.7 billion dollars to promote semiconductor manufacturing, aims to increase semiconductor production in the United States and reduce vulnerabilities in the global supply chain. To date, the legislation has provided grants totaling 30.6 billion dollars to 19 companies, with these projects expected to create 145,000 manufacturing and construction jobs.

President Trump's desire to repeal this legislation could adversely affect the US expansion plans of major semiconductor manufacturers such as Intel and TSMC. For example, Intel announced that it has postponed the opening of its Ohio One facility, whose foundation was laid in Ohio in 2022, to 2031. The company has experienced revenue declines as competitors such as Nvidia and AMD gain market share in the increasingly competitive artificial intelligence sector.

Additionally, TSMC plans to construct three new facilities in Arizona and announced it will make a 100 billion dollar investment in these projects. This investment is expected to strengthen US chip manufacturing capacity and play a critical role in modern economic sectors such as artificial intelligence and advanced manufacturing.

Trump's criticism of the CHIPS Act is also shared by some Republican leaders and figures such as Bernie Sanders. These criticisms argue that the legislation provides semiconductor companies with a "blank check" and constitutes a form of subsidy. Additionally, the Chinese government has engaged in lobbying activities against the legislation, comparing it to "Cold War mentality."

Repeal of the legislation could negatively impact the United States' global competitive strength in semiconductor manufacturing. While approximately 40 percent of global chip production took place in the United States in 1990, this share fell to 12 percent by 2021. The CHIPS and Science Act aims to strengthen the US chip manufacturing sector and counterbalance the dominance of countries such as China in this field.

Trump's attempt to repeal the legislation could also have adverse effects on US national security and economic stability. Semiconductors are critical to numerous sectors, from artificial intelligence to automobiles. For this reason, increasing domestic chip production is viewed as a strategic priority for national security and economic growth.

In conclusion, repeal of the CHIPS Act could weaken the United States' competitive strength in the technology sector and increase national security risks. This situation could further reduce the US share of the global semiconductor market and cause rival countries such as China to gain greater influence in this field.

Key Points:

• The CHIPS and Science Act was enacted in 2022 with a budget of 52.7 billion dollars to promote semiconductor manufacturing.

• President Trump characterized this legislation as a "terrible, terrible thing" and called for its repeal.

• Repeal of the legislation could adversely affect the US expansion plans of major semiconductor manufacturers such as Intel and TSMC.

• The US share of global chip manufacturing was 40 percent in 1990, but declined to 12 percent by 2021.

• Repeal of the legislation could have adverse effects on US national security and economic stability.

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News Link: https://www.supplychaindive.com/news/trump-to-kill-chips-act-not-that-simple-defunding/741963/

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