trump's stance could cancel us chip act, impacting semiconductor industry
Washington, D.C., Tuesday, 21 January 2025.
The US CHIPS and Science Act, crucial for semiconductor manufacturing, may face cancellation with the incoming Trump administration reportedly opposing the act’s costs and initiatives. If canceled, companies benefiting from the act, such as TSMC, could experience significant impact on their operations and stock performance. The act initially aimed to bolster US semiconductor production with $39 billion in investments, but only $4 billion has been utilized to date. This potential policy shift introduces uncertainty into the market, with possible changes affecting the entire supply chain. The situation is evolving, and stakeholders in the semiconductor sector are closely watching the developments. This decision could redefine the landscape for semiconductor manufacturing in the US, altering plans for domestic production and technological advancements. The implications for American competitiveness and economic security are profound, suggesting a challenging period ahead for the sector.
Current state of chips act funding
The CHIPS Act implementation has deployed $39 billion for domestic semiconductor manufacturing [1]. Currently, only $4 billion has been disbursed through agreements across 22 states [1]. If completed as planned, this investment would yield 17 new semiconductor factories and 8 advanced packaging facilities by 2030 [1]. TSMC has already received $1.5 billion in funding during Q4 2024 as part of a larger $6.6 billion direct funding package [3].
Trump’s position and market uncertainty
During his campaign, Trump criticized the CHIPS Act, advocating for tariffs instead of subsidies to promote domestic chip production [3]. However, TSMC CFO Wendell Huang expresses confidence that funding will continue under Trump’s administration, citing ongoing project milestones [3]. The semiconductor industry faces uncertainty as Trump’s stance could affect the planned $450 billion in total electronics manufacturing investments [4].
China’s strategic response
China has launched countermeasures in response to US semiconductor policies [2]. These include investigations into US chip manufacturers for potential dumping violations and scrutiny of companies like Nvidia, Intel, and Micron [2]. Chinese semiconductor industry associations have called for boycotts of US chips, declaring them ‘no longer safe and reliable’ [2]. This escalating tension creates additional market uncertainty [2].
Impact on semiconductor manufacturers
TSMC’s Arizona facilities face potential disruption, with the first fab’s production already delayed to early 2025 and the second fab pushed to 2028 [3]. The company’s planned $65 billion investment in US operations now faces policy uncertainty [3]. Industry experts suggest Trump might maintain the policy due to bipartisan congressional support [3][4], though manufacturers remain cautious about future investments.