A slew of policy changes is expected when the second Trump presidency commences, and the CHIPS and Science Act passed by the Biden administration may be impacted.
President-elect Donald Trump made clear his opposition to the CHIPS Act late last month during an interview on The Joe Rogan Experience podcast, when he said the CHIPS Act is the wrong means for bringing the semiconductor industry back to America.
“When I see us paying a lot of money to have people build chips, that’s not the way,” Trump said on the podcast. “You didn’t have to put up ten cents, you could have done it with a series of tariffs. In other words, you tariff it so high that they will come and build their chip companies for nothing.”
However, even if he opposes the act, Trump cannot act alone. Rolling back the legislation would require congressional approval. The GOP has taken the Senate, which would make it easier for him. In addition, right before the election, House Speaker Mike Johnson said that Republicans “probably will” try to repeal legislation.
But Johnson made that comment while campaigning for a vulnerable New York GOP congressman in a district that is anticipating a large new Micron semiconductor manufacturing plant built with CHIPS Act money. Johnson quickly tried to walk back his statement by saying he would instead like to “streamline” the legislation.
And therein lies the first big dose of reality.
The two states that would benefit the most from the CHIPS Act, Arizona and Ohio, went for Trump, and his vice president, JD Vance, is from Ohio. One would figure the Trump administration won’t penalize their loyalty.
“I gotta imagine, given the amount of money that would go into those communities and the number of jobs that [it would] create, that the Republicans would push back and say, ‘Hey, wait a minute. This money is already spent. Leave it alone. We can’t take that back from our constituencies,’” says Jack Gold, principal analyst with J.Gold Associates consultancy.
Another issue is Trump’s suggested solution: tariffs.
Gold notes that tariffs are a penalty, while the CHIPS Act is an incentive. Incentives, he says, almost always work better than penalties in getting things done and getting people (and companies) to do what you want them to do. It may take a bit longer, but it’s more effective and sustainable.
“He thinks the way to get everyone to [build fabs in America] is if he puts a 20% tariff on chips, then everyone will run to America and build the plants here. That’s not going to happen,” Gold notes.
Gelsinger: Where’s my money?
Meanwhile, Intel awaits its CHIPS Act disbursements.
Since the passage of the CHIPS Act, Intel has started to package chips in New Mexico, and it began construction on new $20 billion fabs in Arizona and Ohio. But it has yet to see a dime from the feds.
CEO Pat Gelsinger expressed his frustration to Yahoo! Finance. “We see the CHIPS Act as a critical thing that we have invested a lot of energy to,” said Gelsinger. “As we said on our [earnings] call, we are disappointed by the time it is taking to get it done. It is well over two years since the CHIPS Act passed and over that period I have invested $30 billion in U.S. manufacturing and we have seen zero dollars from the CHIPS grants. This is taking too long. We need to get it finished.”
When asked for comment on Gelsinger’s statement, Intel provided a statement:
“The idea behind the CHIPS and Science Act began in the first Trump Administration and maintains strong bipartisan support. Restoring America’s semiconductor manufacturing leadership is integral to the country’s economic competitiveness and national security. As the only American company that designs and manufactures leading-edge chips, Intel has a critically important role to play, and we look forward to working with the Trump Administration on this shared priority.”
Source:: Network World