US chip act changes could shake global semiconductor market
Washington, D.C., Saturday, 25 January 2025.
The United States is considering adjustments to the CHIPS Act, with potential implications for the global semiconductor industry. Changes to these policies could profoundly affect industry giants like NVIDIA, ASML, and TSMC. These firms might need to revisit their market strategies and brace for shifts in their stock performance. The semiconductor sector, already a battlefield for geopolitical trade pressures, sees the CHIPS Act as a significant player in bolstering U.S. manufacturing and research and development. This act includes substantial funding and tax incentives, but the pace of disbursement and the effectiveness of tied requirements have been under scrutiny. Geopolitical tensions and potential trade tariffs increase the stakes for the semiconductor industry, which is pivotal in various global sectors, including the medical and AI technology fields. Stakeholders remain vigilant as the impacts of these adjustments unfold.
Current funding status and implementation challenges
The CHIPS Act, with its $280 billion authorization [1], faces scrutiny over its implementation pace. As of mid-2024, only 15% of allocated funds had been awarded [1]. The Commerce Department has announced $33 billion in grants and $5.5 billion in loans across 48 projects in 23 states [1]. Investment tax credits could potentially reach $100 billion [1], making them a significant factor for semiconductor companies’ financial planning.
Trump administration’s stance and market implications
The newly inaugurated Trump administration [4] is expected to maintain support for the CHIPS Act [1], though with potential adjustments to implementation. Industry stakeholders anticipate imminent tariffs on semiconductors [4], prompting manufacturers to increase U.S.-based production. TSMC, a major player, has already secured $6.6 billion in U.S. funding and began production at its first U.S. factory in late 2024 [4].
Impact on global trade relations
Trump’s economic nationalism agenda includes plans for tariffs ranging from 25% to 100% on various trade partners [4]. This approach could significantly impact semiconductor supply chains and market dynamics. PIMCO’s analysis suggests that while these policies might boost short-term U.S. economic growth, they could create challenges for global economic stability [4].
AI and technology sector developments
The semiconductor policy changes coincide with major technological initiatives, including Trump’s newly announced $100 billion AI project ‘Gateway to the Stars’ [6]. This project, alongside the CHIPS Act implementation, could reshape the competitive landscape for semiconductor companies, particularly those involved in AI chip production and advanced computing technologies [6].