Trump Calls for Repeal of CHIPS Act, Sparking Concerns Over AI and Semiconductor Supply Chains

Photo by Christian Wiediger

The future of America’s semiconductor industry is once again in flux as President Donald Trump calls for the repeal of the 2022 CHIPS and Science Act, a move that could unravel billions in funding for chip manufacturing and upend U.S. technological competitiveness.

In a speech to Congress, Trump slammed the CHIPS Act as wasteful, arguing that semiconductor companies don’t need federal subsidies and that repealing the law would free up funds to reduce the national debt.

“Your CHIPS Act is a horrible, horrible thing. We give hundreds of billions of dollars and it doesn’t mean a thing,” Trump declared. “They take our money and they don’t spend it. You should get rid of the CHIPS Act and whatever is left over, Mr. Speaker, you should use it to reduce debt.“

The CHIPS Act, signed into law by then-President Joe Biden in 2022, allocated $52.7 billion to boost domestic chip production, aiming to reduce reliance on foreign suppliers, particularly China and Taiwan. With bipartisan backing, the legislation was seen as a national security measure to keep the U.S. competitive in artificial intelligence (AI), defense, and advanced computing.

But with Trump’s administration now reviewing projects awarded under the program, there is growing uncertainty over the billions in investments from major semiconductor firms like TSMC, Intel, Samsung, and Micron, which collectively received more than $33 billion in federal grants.

For AI-driven industries, this policy shift represents a significant risk. George Kailas, CEO of Prospero.AI, warns that any disruption to semiconductor supply chains could slow AI adoption at a time when businesses need automation the most.

“The new wave of U.S. tariffs is about to send shockwaves through the stock market, and anyone paying attention should be bracing for volatility,” says Kailas. “Tariffs on key imports from China—especially in tech and manufacturing—will disrupt supply chains, drive up costs, and force companies to rethink their AI integration strategies.“

Trump’s push to repeal the CHIPS Act comes just as Taiwan Semiconductor Manufacturing Co. (TSMC) announced a $100 billion investment in the U.S., which includes plans to build five new chip fabrication plants. However, TSMC had previously received $6.6 billion in federal grants under the CHIPS Act, and its eligibility for a 25% investment tax credit could now be at risk.

Similarly, Intel secured up to $7.86 billion in subsidies under the law, alongside other major players like Samsung and Micron, which also received multi-billion-dollar incentives. If Trump moves forward with rolling back these commitments, it could leave semiconductor firms without the financial backing they expected when agreeing to U.S. expansion.

The stakes are high not just for these companies but for the broader AI industry, which relies heavily on access to advanced semiconductors.

“AI depends on advanced semiconductors and cloud infrastructure, both of which are deeply tied to global trade,” Kailas explains. “If costs spike or supply gets bottlenecked, AI adoption could slow at a time when companies desperately need automation to stay competitive.“

Critics argue that Trump’s proposed repeal contradicts his own push for domestic manufacturing, as the CHIPS Act was designed to bring production back to the U.S. and reduce reliance on Chinese imports.

New York Governor Kathy Hochul responded sharply to Trump’s remarks, noting that Micron’s $100 billion investment in Central New York—expected to create 50,000 jobs—was directly tied to CHIPS Act funding.

“The CHIPS Act is the reason Micron is bringing $100 billion and 50,000 jobs to Central New York. Trump just said he wants to get rid of it,” Hochul stated.

Meanwhile, Representative Greg Stanton warned that Trump’s proposal could be devastating for Arizona’s semiconductor industry, where TSMC and Intel have built massive production facilities.

Adding to the turmoil, the Commerce Department office overseeing $39 billion in chip manufacturing subsidies just laid off one-third of its staff, signaling an abrupt shift in priorities under the new administration.

With Trump’s administration actively reviewing past CHIPS Act awards, the semiconductor industry is facing an uncertain future. If the subsidies are revoked or scaled back, companies that planned U.S. expansions could reconsider their investments, potentially slowing efforts to strengthen domestic chip production and AI development.

For now, semiconductor companies and AI-driven businesses must brace for continued volatility, knowing that a single policy shift could reshape the competitive landscape overnight.

As the debate unfolds, one thing is clear: this battle isn’t just about chip funding—it’s about America’s ability to compete in AI, automation, and the next generation of technology.