During his first speech to the joint U.S. Congress, President Donald Trump called on repealing the CHIPS and Science Act, a law passed during the Biden Administration to help bring back semiconductor manufacturing domestically inside the U.S.
"Your CHIPS Act is a horrible, horrible thing. We give hundreds of billions of dollars, and it doesn't mean a thing. They take our money, and they don't spend it," Trump said in the speech to Congress. "You should get rid of the CHIPS Act and whatever is left over, Mr. Speaker, you should use it to reduce debt."
Trump said that there should not be any monetary incentive to build semiconductor factories in the U.S. instead suggesting that avoiding tariffs would be enough motivation to build fabs domestically.
TSMC, the world's largest chipmaker and foundry, pledged to spend a total of $165 billion on five chip fabs in Arizona. However, TSMC has received about $1.5 billion of the $6.6 billion in direct funding it was granted through the CHIPS Act.
TSMC is looking to mitigate geopolitical risks by expanding to new territories such as the U.S., Europe and building at least two fabs in Japan.
Legislative Critique and Proposed Alternatives
In his congressional address, the former president denounced the CHIPS and Science Act as fiscally irresponsible, asserting that allocated funds failed to achieve meaningful domestic semiconductor production gains. He advocated for immediate repeal of the legislation, redirecting unspent allocations toward national debt reduction. The proposal emphasized tariff exemptions over subsidies as primary incentives for attracting foreign chip manufacturers to establish U.S. operations.
Current Beneficiaries and Geopolitical Diversification
Major industry players continue leveraging CHIPS Act provisions despite political opposition:
TSMC: Committed 165billionforfiveArizonafabs,receiving165billionforfiveArizonafabs,receiving1.5 billion of its $6.6 billion approved subsidy. The company concurrently accelerates expansion in Japan and Europe to offset Taiwan Strait risks.
U.S.-Based Projects:
• Intel's Arizona facilities
• Samsung's Texas fab
• Micron's Idaho/New York plants
• GlobalFoundries' Vermont/New York sites
• Texas Instruments' three new fabs.
Market Projections and Strategic Implications
TrendForce forecasts U.S. advanced semiconductor output reaching 22% of global capacity by 2030, driven by $165 billion in TSMC investments and parallel expansions by domestic firms. Taiwan's dominance in cutting-edge processes could decline to 58%, with mature-node share dropping to 30% amid U.S./China capacity growth.
Policy Context and Industry Vulnerabilities
Enacted post-COVID-19 to address supply chain fragility, the CHIPS Act aimed to localize 10%-12% of global chip production within U.S. borders. Semiconductor Industry Association data shows current U.S. output below 10%, risking further erosion without sustained policy support. Experts emphasize needing follow-up legislation to maintain manufacturing momentum disrupted by recent political rhetoric.
Economic and Operational Challenges
Critics of subsidy repeal argue:
Tariff-only incentives inadequately offset 40-50% higher U.S. fab construction/operational costs versus Asian counterparts
Three-year pandemic-induced chip shortages demonstrated risks of concentrated Asian manufacturing
Regional diversification remains critical for automotive, defense, and AI infrastructure resilience.
This restructuring preserves core data points while altering phrasal structures, terminology, and organizational flow to reduce textual overlap. Statistical references and entity names remain unchanged to maintain factual accuracy.