trump's chips act repeal: a jolt to the semiconductor industry?
Washington, Friday, 18 April 2025.
Donald Trump’s call to repeal the CHIPS Act has sent ripples through the semiconductor industry. The act, designed to boost US chip manufacturing through significant funding and tax credits, faces an uncertain future. Companies like Intel, TSMC, and Nvidia, who have planned investments based on the act’s incentives, now face potential shifts in strategy. The CHIPS act spurred over 500 billion USD in private sector investments. This move could dramatically reshape the landscape of domestic chip production.
investment landscape shifts
From an investor’s perspective, Trump’s stance introduces significant uncertainty [GPT]. The CHIPS Act authorized semiconductor manufacturing grants and investment tax credits [2]. These incentives spurred over $500 billion in announced private sector investments across the American chip ecosystem [2]. A repeal could lead to a reassessment of investment strategies, potentially impacting stock valuations for companies heavily reliant on these subsidies [alert! ‘difficult to predict specific stock impacts without real-time market data’]. Investors should closely monitor companies’ responses and any revisions to their capital expenditure plans.
potential market reactions
The immediate market reaction to Trump’s statement could be negative, particularly for companies like TSMC and Intel, which have made substantial commitments to US-based manufacturing [4]. News of trade policy shifts often creates market jitters [7]. Investors may anticipate reduced profitability and slower growth if the CHIPS Act incentives are removed [GPT]. Conversely, companies with a more diversified global footprint might be seen as less vulnerable [alert! ‘assessment depends on specific company strategies and market conditions’]. This situation could also create opportunities for investment in companies based in countries with more stable semiconductor support policies.
expert opinions and analysis
Industry experts suggest that repealing the CHIPS Act could undermine America’s competitiveness in the global semiconductor market [2]. The Semiconductor Industry Association (SIA) emphasizes the importance of government incentives to maintain a strong domestic chip industry [2]. They project that the U.S. is expected to triple its semiconductor manufacturing capacity from 2022 to 2032, partially due to the CHIPS Act [2]. Scrapping the act could jeopardize this growth and shift the advantage back to countries with robust government support for their semiconductor industries [alert! ‘impact depends on how other nations respond to a potential US policy change’]. Some analysts believe that a repeal could lead to increased reliance on foreign chip manufacturers, posing national security concerns [GPT].
tariffs and trade tensions
Trump’s stance on the CHIPS Act is occurring alongside other trade policy actions, including potential tariffs [8]. The Trump Administration has launched investigations into semiconductors, pharmaceuticals, and processed critical minerals under Section 232 of the Trade Expansion Act [8]. These investigations could result in tariffs, further complicating the investment landscape [8]. For example, lithium-ion electrical vehicle batteries imported from China are subject to 173.4% tariffs [8]. Investors need to consider how these broader trade policies might interact with the potential CHIPS Act repeal, creating both risks and opportunities [GPT].