(March 5): President Donald Trump called for ending a bipartisan US$52 billion (RM230.8 billion) semiconductor subsidy programme that’s spurred more than US$400 billion in investments from companies like Taiwan Semiconductor Manufacturing Co and Intel Corp.

“Your Chips Act is horrible, horrible thing,” the president said in a prime-time address to Congress on Tuesday. Trump implored US House Speaker Mike Johnson to get rid of the legislation and use “whatever is left over” of funds apportioned to the programme to “reduce debt or any other reason.”

His remarks were met with applause in a chamber that less than three years ago passed the Chips and Science Act. Vice-President JD Vance, whose home state of Ohio won a massive Intel project thanks to the law, stood up to show his support for its revocation.

The Chips Act is among the most significant US forays into industrial policy in more than a generation. It set aside US$39 billion in grants — plus loans and 25% tax breaks — to revitalise American semiconductor manufacturing, as well as US$11 billion for chip research and development. The aim was to reduce reliance on Asia for electronic components that power everything from smartphones to massive data centres.

Democrats and Republicans have touted the Chips Act as crucial to US national and economic security, and Trump could have a hard time getting the votes to repeal it. Dozens of GOP lawmakers voted for the measure, and many red districts have won factories or other projects supported by the law.

Taiwan’s TSMC and South Korea’s Samsung Electronics Co and SK Hynix Inc have announced or begun construction on multibillion-dollar projects in the US that were contingent on funding and support from the US government. Representatives of the companies declined to comment on the president’s remarks.

Trump has expressed support for the overall goal of boosting domestic chipmaking, but he’s consistently derided the Chips Act as the wrong means of achieving it. Instead, the president has called for tariffs to stoke investment in the US, and he’s signaled that import levies on chips could come as soon as next month.

Companies can avoid those duties, Trump has said, by building factories on American soil. He has not offered additional details.

On Monday, Trump credited the tariff threats for TSMC’s decision to invest US$100 billion in the US, on top of a previous US$65 billion commitment. He touted that project in his address Tuesday, referencing the full US$165 billion figure. “We’re giving them no money,” Trump said. “All that was important to them was they didn’t want to pay the tariffs.”

What that actually means for TSMC is murky. The company originally announced plans for a US$12 billion US site during Trump’s first term and expanded that project to three factories under Biden. To support those facilities, TSMC struck an agreement with Biden officials for US$6.6 billion in Chips Act grants and US$5 billion in loans.

As is the case for other Chips Act awards, the funding is supposed to be disbursed over time, as TSMC hits negotiated project milestones. The company received US$1.5 billion before Biden left office.

Trump did not specify whether he would attempt to claw back money that’s already been disbursed, renege on remaining incentives already earned by TSMC, or simply not provide additional support for the chipmaker’s latest investment. Commerce Secretary Howard Lutnick said Monday that the newly announced projects — three additional chip plants, plus an R&D site and a factory for advanced packaging — won’t win federal funds.

“The main uncertainty is the future of TSMC,” said Xin-Yao Ng, an investment director at abrdn plc. “One long-time competitive advantage was their clustering in Taiwan, where labour costs are still reasonable, construction costs are cheaper, government is supportive, and they can find more workers with vocational training. It’s completely different in the US if they are to shift more manufacturing. Subsidies from US were to be crucial to help mitigate some of the higher costs and challenges.”

TSMC is among 20 companies that reached binding Chips Act agreements with Biden officials. The deals, which represent more than 85% of the manufacturing incentives available under the programme, are designed to support leading-edge facilities by companies like TSMC, Intel, Samsung and Micron Technology Inc — as well as older-generation factories by the likes of GlobalFoundries Inc and Texas Instruments Inc.

Companies have generally viewed those agreements as ironclad — regardless of who’s in office. But some of them have worried that the Trump administration could seek to modify the terms, Bloomberg has reported. Lutnick has said he cannot commit to honoring existing contracts without reviewing them first.

That review is ongoing, and Lutnick’s intentions for the initiative remain unclear. So far, his questions to programme staff have focused on the rationale behind award decisions and the government’s legal authority to claw money back, Bloomberg has reported. The current Chips Act team, meanwhile, has been preparing a list of potential adjustments to the funding application process and final contracts that would be minimally disruptive.

A spokesperson for GlobalWafers Co, which won US$406 million from the Chips Act for factories in Texas and Missouri, said the Taiwanese company is committed to its expansion strategy and views any changes to the Chips Act as “unlikely.”

But if the law were to be modified in some way, the spokesperson said, “we would reassess future investments, including evaluating US market demand, pricing, and potential tariffs if production were moved outside the US.”

Uploaded by Magessan Varatharaja