Washington D.C. – Wednesday saw the semiconductor world holding its breath as Commerce Secretary Howard Lutnick testified before a Congressional hearing, signaling a potential shakeup in the Biden administration’s semiconductor subsidy bonanza. The bombshell? The Trump administration, following the former president’s lead, is renegotiating some of the hefty financial incentives offered to chipmakers under the CHIPS and Science Act, leaving the industry to wonder: Which deals will survive?
The CHIPS Act, signed into law in 2022, promised a staggering $52.7 billion to revitalize U.S. semiconductor manufacturing and research, with the goal of luring giants like TSMC, Samsung, SK Hynix, Intel, and Micron away from Asian production hubs. But the rollout, while widely touted, has been slow, with the bulk of the funds only now starting to trickle out as the current administration takes over. The implication is that the original agreements, crafted by the previous government, now face scrutiny.
Rumors of potential renegotiations have swirled for months, with whispers of delays in disbursements. Adding fuel to the fire, a recent address by the former president on Capital Hill saw him brandishing the CHIPS Act as a “bad thing”, intensifying the spotlight on its financial generosity.
Secretary Lutnick didn’t mince words during his testimony to the Senate Appropriations Committee, stating that some of the Biden-era grants “seemed a bit too generous, and we’ve been able to renegotiate.” His stated goal: to ensure that American taxpayers get the best possible return on investment.
“All of the deals are getting better, and a few of the deals that are not getting done are the ones that shouldn’t have been done in the first place” Lutnick elaborated, hinting that not all of the original funding deals are safe.
The Secretary specifically highlighted TSMC as a successful example of renegotiation. He noted that the company had increased the initial US manufacturing investment commitment by $100 billion, although it remains unclear exactly how much, if any, of this additional commitment is a direct result of the renegotiation.
The chipmaking world is watching, weighing what this administration’s new vision means for the future of American semiconductor independence. The market will be keenly observing any shifting of funds or revised commitments to gauge the long-term impact on companies and the future of the industry.
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