A Comprehensive Analysis of the U.S. $52 Billion Chip Bill: Reworking or Repackaging? A Significant Shift in Trump’s Semiconductor Policy
The U.S. Chips Act: A Pillar of Biden’s Industrial Policy
The U.S. Chips Act, passed by the Biden administration in 2022, is an industrial policy aimed at allocating $52 billion to revive the American semiconductor industry and reduce dependence on Asian supply chains. However, after Trump returned to power, he criticized the act as a waste of money and argued that tariffs are more effective than subsidies. While he publicly called for the repeal of the act, he also signed an executive order to establish a new entity to take over its execution, serving as a “stepping stone” to seize control of the narrative.
What is the Chips Act? Biden’s $52 Billion Plan to Revitalize the Industry
The Chips Act is one of the largest industrial policies in the U.S. in recent years, with key components including:
- $39 billion: Providing subsidies to encourage companies to produce chips in the U.S.
- $11 billion: Supporting research and innovation.
- $75 billion in loans or loan guarantees: Available for companies to apply, but not heavily utilized.
- 25% investment tax credit: More beneficial for companies than direct subsidies.
This policy has spurred nearly $450 billion in private investment, meaning that for every dollar the government spends, it brings in nearly $10 in funding. The main beneficiaries include four major chip manufacturers: Intel, TSMC, Samsung, and Micron.
Why Trump is Unhappy: Directly Calling the Act “Terrible”
Trump has criticized the act as “wasting taxpayers’ money” since the election period and publicly called for its repeal in Congress. He stated that he would use “tariffs” to compel companies to return to the U.S. for manufacturing and hinted at the possibility of imposing new import tariffs on semiconductors. However, his actions have contradicted his words.
Surface-Level Repeal but Actual Takeover: Trump Takes Charge of Chip Subsidies
Following his criticisms, Trump quickly signed an executive order in March to establish the United States Investment Accelerator, led by newly appointed Commerce Secretary Lutnick, to handle the execution and negotiation of the Chips Act. The goal is not only to review past contracts but also to strengthen executive authority, potentially delaying disbursements and renegotiating subsidy conditions.
Slow Progress but Solid Structure of the Chips Act Funding Model
Although the act approved $39 billion in subsidies, the Biden administration has only issued about $4.3 billion, as subsidies are disbursed in phases based on meeting specific targets. Most of the funds have already been contracted to 20 companies and cannot be diverted by the Trump administration, only the execution details can be altered. Furthermore, the main highlight of the act is the 25% tax credit, which has no upper limit. Companies can deduct 25% of their construction costs after building facilities. Statistics indicate that this will lead to over $85 billion in reduced tax revenue for the U.S. government, far exceeding Congressional expectations.
TSMC and Intel: The Biggest Winners of the Subsidies
Currently, about 75% of the subsidies are concentrated among four major advanced manufacturing companies:
- Intel: Total subsidies amounting to approximately $7.9 billion, plus an additional $3 billion for military chips.
- TSMC
- Samsung Electronics
- Micron
Additionally, a $500 million allocation is reserved for small and medium-sized enterprises in the supply chain, which has not yet been disbursed. Arizona, Ohio, New York, and Texas are the states with the most new manufacturing facilities.
Trump’s Fatigue Strategy: No Subsidies and Tariffs to Force Investments
Even though the subsidy funds are currently inaccessible, Trump continues to use “tariff threats” as leverage to compel companies to invest. For example:
- TSMC announced an additional investment of $100 billion (totaling $165 billion), yet the U.S. government has not increased its subsidies.
Trump claims this is a “victory for tariff policy,” while TSMC states it is due to strong demand in the U.S. market. It seems Trump intends to steer the narrative towards subsidies being disbursed, but will delay timelines and negotiate conditions to make companies more compliant.
The Chances of Completely Abandoning the Chips Act Are Low
Currently, the Chips Act has garnered bipartisan consensus. With Trump winning as the Republican candidate, many of the chip manufacturers receiving subsidies are located in Republican districts, making a total “repeal” highly unlikely:
- House of Representatives: Although controlled by Republicans, the majority is slim, and there are significant divisions within the party.
- Senate: Dominated by Democrats, who can use filibuster rights to block any attempts to repeal the act.
If changes are to be made, they may target pro-labor provisions or environmental requirements added during the Biden era, rather than the core of the act.
Potential Future Directions: Trump’s Style is “De-Bidenization”
At this stage, Trump is likely to turn this policy into “his achievement”:
- Review contracts negotiated by the Biden administration and demand concessions from companies.
- Renegotiate subsidy conditions through executive authority.
- Use tariffs and tax incentives as alternative leverage.
- Potentially strengthen the 25% tax credit, though timelines and eligible parties remain undetermined.
It’s not that he wants to abandon the Chips Act, but rather to change its leadership. The U.S. is transitioning from a “buyer” to a key role in “manufacturing revitalization,” and Trump does not deny this direction, but he wants to do it “his way.” This means leveraging powerful economic tools (dollar hegemony, systems, technology, energy, finance) to compel overseas manufacturers to return to invest through tougher negotiations and political control. However, there is a risk of a retaliatory wave from countries around the globe in response to such measures, which will require close monitoring.
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