Introduction:
Former U.S. President Donald Trump has called for the cancellation of the $52 billion CHIPS Act, a key initiative of his predecessor, Joe Biden.
The CHIPS Act was designed to boost domestic semiconductor manufacturing and reduce reliance on foreign supply chains.
However, Trump argues that government subsidies are unnecessary, as global tech companies are already investing in the U.S. without them.
Instead, he advocates for a free-market approach to strengthening the semiconductor industry.
This announcement has reignited debates about the role of government incentives in driving technological advancement and economic growth.
What is the CHIPS Act?
The CHIPS Act (Creating Helpful Incentives to Produce Semiconductors for America Act) was signed into law by President Biden in August 2022.
It allocates $52 billion in funding to support semiconductor manufacturing and research in the U.S. The main objectives of the act include:
- Encouraging chip production on U.S. soil.
- Reducing dependence on foreign semiconductor suppliers, especially China and Taiwan.
- Strengthening national security by securing the chip supply chain.
- Creating high-paying jobs in the tech sector.
The act was introduced as a response to the global semiconductor shortage, which disrupted industries such as automotive, electronics, and defense.
Supporters argue that government funding is necessary to compete with countries like China, which heavily subsidizes its own chip industry.
Trump’s Argument Against the CHIPS Act
In his recent address to Congress, Trump urged lawmakers to eliminate the CHIPS Act, stating that tech giants will invest in the U.S. without taxpayer-funded subsidies.
He pointed to major global companies, such as Japan’s SoftBank and Taiwan Semiconductor Manufacturing Co. (TSMC), which have already committed to expanding their presence in the U.S.
https://www.yolegroup.com/product/report/overview-of-the-semiconductor-devices-industry-h1-2025
Key Points of Trump’s Argument:
Market Forces Drive Investment:
Trump believes that companies are investing in the U.S. due to favorable business conditions, not government handouts.
He argues that eliminating corporate regulations and offering tax cuts would be a better strategy for attracting investments.
Government Spending Concerns:
The CHIPS Act’s $52 billion price tag raises concerns about government overspending.
Trump suggests redirecting these funds to other sectors, such as infrastructure and national defense.
Existing Private Investments:
Major semiconductor manufacturers have already committed billions to U.S. projects.
TSMC is constructing a $12 billion chip plant in Arizona, and Intel is expanding production across multiple states. Trump sees this as proof that subsidies are unnecessary.
Global Partnerships Are Growing:
Trump also highlighted international cooperation, particularly Japan and South Korea’s increasing involvement in U.S. tech manufacturing.
He noted discussions around a proposed U.S.-Japan natural gas pipeline through Alaska, which could support semiconductor factories.
The Debate: Government Subsidies vs. Free Market
The debate over the CHIPS Act reflects a larger discussion on government involvement in the economy.
Supporters argue that subsidies are needed to compete with China and secure America’s technological future.
Opponents, including Trump, believe in a hands-off approach that lets market forces dictate investments.
Arguments for the CHIPS Act:
- Ensures U.S. leadership in semiconductor manufacturing.
- Reduces reliance on foreign suppliers, improving national security.
- Creates thousands of high-paying jobs.
- Helps counter China’s state-backed semiconductor industry.
Arguments Against the CHIPS Act:
- Costs taxpayers billions of dollars.
- Private companies are already investing without subsidies.
- Government intervention distorts free-market competition.
- Funds could be used for other priorities.
Conclusion
Trump’s call to scrap the CHIPS Act has reignited debates about government subsidies in the tech sector.
While some argue that federal funding is essential for maintaining U.S. semiconductor leadership, others believe that market-driven investments will achieve the same goal without taxpayer expense.
The future of U.S. semiconductor policy remains uncertain. Whether the CHIPS Act survives or gets replaced with a more market-driven approach, one thing is clear—global investment in the U.S. chip industry is rising, and the competition for semiconductor dominance will only intensify.
