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The Biden administration is trying to finalize the CHIPS Act agreements before Donald Trump takes office.
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The president-elect has criticized the CHIPS law and supported tariffs as an alternative.
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Locking in agreements could make it more difficult for the Trump administration if it decides to change course.
The Biden administration is running out of time to finalize deals that would secure billions in financing for U.S. chipmakers.
In 2022, President Joe Biden signed the CHIPS Act into law, which included $39 billion in manufacturing incentives for U.S. chip manufacturing, along with $13.2 billion for semiconductor research and workforce development. In addition to creating U.S. jobs, the administration hoped to secure supply chains and reduce the U.S.’s dependence on advanced chips from Taiwan.
More than 90% of the subsidies have been awarded, Bloomberg reports. But that money has not yet been fully secured. Of the 24 semiconductor manufacturers and suppliers that have received financing, only two binding agreements have been announced – comprising approximately $6.6 billion in combined financing – the Commerce Department told BI.
The Biden administration is working to finalize agreements before President-elect Donald Trump — who has criticized the CHIPS Act — takes office in January. In April, Commerce Secretary Gina Raimondo told CNBC that the government would allocate all $39 billion in subsidies before the end of the year. The government is also expected to finalize at least a few more agreements in the coming months, Reuters reported.
The most recent update came on November 15, when the Commerce Department announced it had finalized a $6.6 billion grant for Taiwan-based chipmaker TSMC. The company is expected to receive at least $1 billion of this funding by the end of the year.
Enshrining CHIPS Act agreements could make it harder for the Trump administration to slow the financing process if it chooses to shift semiconductor policy from subsidies to tariffs. A Commerce Department spokesperson told BI that completed CHIPS Act agreements are binding contracts: after an agreement is finalized, funding cannot be withdrawn unless the company fails to adhere to the terms of the deal. If not, they said withdrawing funding would require an act of Congress.
In an interview with podcaster Joe Rogan in October, Trump said tariffs would have been a better way to motivate chipmakers to invest in the US. And in November, House Speaker Mike Johnson said Republicans could try to amend the CHIPS law by eliminating certain “costly regulations” and environmental requirements.
Trump “will follow through on the promises he made during his campaign,” Karoline Leavitt, spokeswoman for the Trump-Vance transition, told BI. However, she did not answer questions about whether Trump’s approach to CHIPS Act funding might differ from the Biden administration’s.
Jeff Koch, an analyst at semiconductor research and consulting firm SemiAnalysis, told Business Insider that the Trump administration will likely favor trade restrictions such as tariffs over subsidies for chipmakers as it tries to boost domestic chip production.
While Koch thinks an outright invocation of the CHIPS Act is unlikely, he said the Trump administration could delay the funding process, which is one reason the Biden administration is now trying to get the ball rolling.
“This had the added benefit of pushing the Biden administration to cut red tape and disburse CHIPS Act funds while they were still in power, and it appears they are trying to do that,” Koch said.
A variety of factors are holding back the completion of more CHIPS Act agreements. For example, Intel — the largest potential recipient of CHIPS Act funding — has been in discussions with the U.S. government about the benchmarks it must meet to receive funding once the deal is finalized, The New York Times reported in October.
“We’re disappointed with how long and how slow the funding has been and at this point it’s been over two years,” Intel CEO Pat Gelsinger told Bloomberg on Oct. 31.
Do you work in the US semiconductor industry? Contact this reporter at jzinkula@businessinsider.com
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