President Donald Trump’s trade war and efforts to bring manufacturing back to US shores have put one of his predecessor’s signature achievements on the firing line: the Chips and Science Act.

Signed by Joe Biden in 2022, the bipartisan law is Washington’s $52 billion bid to revitalize the American semiconductor industry. The goal is to reduce US reliance on Asia for the tiny components that are the lifeblood of the modern economy, found in smartphones and missiles alike.

The Chips Act has spurred nearly $450 billion in commitments to build factories on US soil, approaching almost $10 of private sector investment for every $1 spent by the government.

Even so, Trump has complained that the program is a waste of taxpayer money, telling Congress that it’s a “horrible, horrible thing” and imploring Republican lawmakers, who control both chambers, to scrap the legislation. The president argues that tariffs function better than subsidies to encourage investment in the US and has signaled he’ll impose new import levies on semiconductors “down the road.”

But there are signs that Trump does not view import duties and direct funding as mutually exclusive options. A month after calling for a Chips Act repeal, he signed an executive order establishing a new office to administer Chips Act funds and negotiate “better deals” than the Biden administration — indicating that he may just seek to put his own stamp on the program rather than do away with it entirely.

What is the Chips Act?

The law is among America’s biggest forays into industrial policy. It includes $39 billion in grants to incentivize semiconductor manufacturing and $11 billion for research and development. Companies can also access up to $75 billion in loans and loan guarantees, though the Commerce Department — which oversees the funding — has only used a small amount of that authority. Several major chipmakers opted not to tap that financing.

More than 85% of the grant funding, spread across 20 firms, was finalized prior to Trump reentering office. But only $4.3 billion actually went out the door under Biden. That’s because the awards are designed to be disbursed over time as companies hit negotiated project milestones, and factories take years to build.

The Chips Act also includes a lucrative 25% tax credit for manufacturing projects which, for most businesses, will constitute the largest federal incentive they access under the program. Grants, by comparison, typically cover 10% to 15% of project costs. Together, these policy tools aim to make it as cost-effective to build a factory in the US as in Asia, which has benefited from access to cheaper labor and economies of scale.

There’s no cap on the dollar amount firms can claim from the Chips Act’s tax credit. The Peterson Institute for International Economics estimated in June 2024 that this credit could cost the government over $85 billion in foregone revenue, more than three times the original projection of the Congressional Budget Office — a reflection of the huge amount of investment the law spurred.

Who are the main beneficiaries of the Chips Act?

Around three-quarters of the grant funding is slated to go to four companies that produce advanced semiconductors: Intel Corp., Taiwan Semiconductor Manufacturing Co., Samsung Electronics Co. and Micron Technology Inc. Intel is the single biggest beneficiary, with a $7.9 billion grant to support commercial factories and a separate $3 billion award geared toward the production of military chips.

Firms that produce older generations of chips have also been selected for funding, such as Texas Instruments Inc. and GlobalFoundries Inc., as well as companies building plants for packaging — the process of fitting chips together for use in devices.

The Commerce Department set aside $500 million for smaller businesses across the semiconductor supply chain, but didn’t announce any awards from that program before Biden left office.

The US states with the largest pledged investments include Arizona, Ohio, New York and Texas.

How has the Chips Act impacted the US semiconductor industry?

While the Chips Act represents a large total in terms of taxpayer money, it’s a relatively small sum for the semiconductor industry, where single companies can burn through a comparable amount in just one year. TSMC, for example, expects its capital expenditure to reach as much as $42 billion in 2025.

Nonetheless, the law has had a measurable impact. Spending on the construction of US chip factories skyrocketed in the months leading up to and following the passage of the Chips Act. Even businesses that aren’t directly receiving government funds are benefiting from a US ecosystem that now includes the biggest names in the sector. And they, too, can qualify for the 25% tax credit.

That’s a sea change from just a few years ago, when the country made virtually none of the world’s most advanced logic chips — the components that serve as the brains of devices. The Biden administration sought to get that share to 20%; Trump, when announcing TSMC’s $100 billion investment, said he’s targeting 40%.

To approach those levels, the US would need companies’ plans to turn into real factories. Some projects, like TSMC’s facility in Arizona, have gone exceptionally well. But Intel and Samsung, the other two big spenders, are mired in financial woes, which could put their overall investment plans at risk.

Across all types of chips, the Washington-based Semiconductor Industry Association estimated last year that the US is on track to triple its manufacturing capacity by 2032, bolstering its global market share to 14%, from 10% at present. Without the Chips Act, the group said the US share would have likely shrunk to 8%.

The American push comes alongside major semiconductor industrial policy efforts from scores of other countries, especially China. The Asian nation is trying to beef up its advanced chipmaking sector while also making massive investments in older types of chips, rolling out subsidies that have raised alarm among US officials.

Can Trump succeed in axing the Chips Act?

The Chips Act enjoys broad support in Congress, having passed with bipartisan backing. Many Republican congressional districts have been chosen as sites for factories that have been awarded funding. A full repeal of the law would be politically difficult given the party’s slim majority in the House of Representatives plus the likelihood that Senate Democrats would deploy the filibuster, a prerogative to demand neverending debate to thwart legislation.

If nullifying the act is off the cards, Republicans could attempt to roll back the provisions they find objectionable, such as labor-friendly regulations or environmental requirements.

Could the Trump administration reshape the Chips Act in other ways?

Commerce Secretary Howard Lutnick said during his January confirmation hearing that he intended to review Chips Act awards that were finalized under the Biden administration, in order to get what he calls the “benefit of the bargain.” That’s now happening under the purview of a new entity in the Commerce Department, known as the United States Investment Accelerator. Trump established the office in March via executive order, which emphasized a focus on “negotiating much better deals” than Biden achieved.

The Trump team’s primary goal is to spur more announcements like that of TSMC, which said in March it’s investing an additional $100 billion in US plants, on top of a previous $65 billion pledge — an expansion that comes without a corresponding increase in its Chips Act grants. Both Trump and Lutnick credited the threat of tariffs for the decision, although TSMC attributed its US growth to significant market demand.

Lutnick is now putting pressure on other companies to follow in TSMC’s footsteps. His team has signaled that he could withhold promised grants, people familiar with the matter told Bloomberg News, and he’s indicated a willingness to slow-walk disbursement of funding that’s already been agreed upon.

Yet at the same time, Lutnick has expressed interest in increasing the Chips Act’s 25% tax credits. He hasn’t yet offered specifics, such as whether an increase would focus on the timeframe for eligibility or the actual size of the credit that companies can claim. Any expansion could have huge fiscal implications, benefiting every company building a qualified facility in the US — not just those in line for direct Chips Act funding.

Even if Lutnick’s review process results in changes to individual agreements, the Trump administration is still legally obligated to spend the money appropriated by Congress for the Chips Act. Lawmakers have already appropriated the full $39 billion in manufacturing incentives through fiscal year 2026.