By Brian Swint

President Donald Trump reiterated his opposition to tax breaks for investing in semiconductor production in America. Chip stocks shrugged it off.

In his address to Congress Tuesday, Trump called the Chips Act, which has prompted Taiwan Semiconductor Manufacturing Co. and Intel to commit to building semiconductor plants in the U.S., a "horrible, horrible thing." He said Congress should repeal the law and to use the money saved to reduce debt.

Trump's opposition isn't new--he argues that giving hefty tax credits to invest in the U.S. is a waste of money because his strategy of imposing tariffs on chips would have the same effect. He brought up TSMC's recent pledge to spend $165 billion to build out facilities as evidence that he's right.

The idea behind the Chips Act, which has cost about $53 billion so far after being signed by President Joe Biden two years ago, is that the dispersion of the semiconductor supply chain through the U.S., Europe, and Asia presents a security risk--especially if tension between Taiwan and China should escalate. Trump is also in favor of onshoring more chip production, but he disagrees with the means.

The legislation has coincided with more U.S. investment, including in states that favor Trump's Republican Party. Intel has committed billions of dollars to build factories in Ohio, the home state of Vice President JD Vance.

"Trump called on Congress to 'get rid of' the Chips Act," said Raymond James analysts led by Ed Mills. "It is unlikely to be repealed and the 25% tax credit for capex is likely to remain."

Intel was up 0.6% in premarket trading Wednesday. Nvidia, the biggest U.S. chip company by market capitalization, added 1.6%, and TSMC American depositary receipts gained 2%. Broadcom shares rose 2%.

Write to Brian Swint at brian.swint@barrons.com

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March 05, 2025 07:45 ET (12:45 GMT)

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