chips act faces major setback: office staff slashed amid subsidy concerns

chips act faces major setback: office staff slashed amid subsidy concerns

2025-03-11 general

washington, Tuesday, 11 March 2025.
The US CHIPS Act, designed to revitalize domestic semiconductor manufacturing, is facing significant headwinds. The office responsible for overseeing the distribution of $52.7 billion in subsidies has reportedly experienced an 86% staff reduction. This comes as the Trump administration reviews and potentially renegotiates the terms of the CHIPS and Science Act, creating uncertainty for major players like TSMC and Intel. Some reports indicate staff were asked to ‘justify their intellect’ with IQ tests before being let go.

chips act faces major setback: office staff slashed amid subsidy concerns

The US CHIPS Act, designed to revitalize domestic semiconductor manufacturing, is facing significant headwinds. The office responsible for overseeing the distribution of $52.7 billion in subsidies has reportedly experienced an 86% staff reduction [1]. This comes as the Trump administration reviews and potentially renegotiates the terms of the CHIPS and Science Act, creating uncertainty for major players like TSMC and Intel [1]. Some reports indicate staff were asked to ‘justify their intellect’ with IQ tests before being let go [3].

impact of staff reductions

The CHIPS Program Office, established in 2022, was initially staffed with approximately 150 experts in technology, policy, and finance [1]. Following the staff cuts, only 22 probationary employees remain [1]. Key departments like external affairs and strategic policy advisors have been eliminated, leaving only basic administrative personnel to execute grants [1]. This drastic reduction raises concerns about the office’s ability to effectively manage and disburse funds, potentially slowing down the entire chip revival plan [1].

trump’s stance and potential policy shifts

President Trump has been a vocal critic of the CHIPS Act, calling it a ‘horrible, horrible thing’ and advocating for tariffs instead of subsidies [5]. He believes tariffs are a more efficient way to encourage manufacturing to return to the US [1]. Trump’s administration is already reviewing projects authorized under the act and considering renegotiating subsidy terms, potentially delaying some allocations [1]. These actions align with his broader agenda of reducing the federal workforce and shifting away from what he views as inefficient bureaucratic systems [1].

industry reactions and investment implications

The potential changes to the CHIPS Act are causing concern among semiconductor companies that have announced major investments in US manufacturing [1]. Companies like TSMC, Intel, and Samsung have all pledged significant investments based on the availability of government subsidies [1]. While TSMC has reaffirmed its commitment with an additional $100 billion investment, the long-term impact of subsidy reductions or tariff implementations remains uncertain [1][5]. Intel, heavily reliant on CHIPS Act funding, faces significant challenges if subsidies are withdrawn [1].

economic expert opinions and potential consequences

Economic experts warn that Trump’s tariff policies could increase the price of semiconductors and related goods, harming consumers and potentially hindering US competitiveness in areas like artificial intelligence [1]. Brett House, a professor at Columbia Business School, suggests tariffs could weaken the US tech sector [1]. Saichit Kaudhuri from the University of California, Berkeley, also cautions that tariffs could increase prices and impede US leadership in AI [1]. These concerns highlight the delicate balance between incentivizing domestic production and maintaining economic stability [1].

potential impact on stock values

The uncertainty surrounding the CHIPS Act and potential tariff implementations could negatively impact the stock values of companies heavily invested in US semiconductor manufacturing. Companies like Intel (INTC), TSMC (TSM), and Samsung (005930.KS) [alert! ‘Samsung ticker symbol from GPT’] could experience volatility as investors react to policy changes. Furthermore, potential trade disputes arising from tariff policies could destabilize the global economy, affecting broader market sentiment and investor confidence [1]. Investors should closely monitor policy developments and assess the potential risks to their portfolios [GPT].

Bronnen


chips act subsidy renegotiation