EXCLUSIVE-Trump prepares to change US CHIPS Act conditions, sources say

Reuters
02-14
EXCLUSIVE-Trump prepares to change US CHIPS Act conditions, sources say

Trump administration reviews CHIPS Act subsidy requirements

Some upcoming CHIPS Act payments are being delayed

Major award recipients include Intel, TSMC, Samsung, Micron

By Mike Stone, Fanny Potkin and Wen-Yee Lee

WASHINGTON/SINGAPORE/TAIPEI, Feb 13 (Reuters) - The White House is seeking to renegotiate U.S. CHIPS and Science Act awards and has signaled delays to some upcoming semiconductor disbursements, two sources familiar with the matter told Reuters.

The people, along with a third source, said the new administration is reviewing the projects awarded under the 2022 law, meant to boost American domestic semiconductor output with $39 billion in subsidies.

Washington plans to renegotiate some of the deals after assessing and changing current requirements, according to the sources. The extent of the possible changes, and how they would affect agreements already finalized, was not immediately clear. It was not known whether any action has yet been taken.

“The CHIPS Program Office has told us that certain conditions that do not align with President (Donald) Trump's executive orders and policies are now under review for all CHIPS Direct Funding Agreements,” GlobalWafers 6488.TWO spokesperson Leah Peng said in a statement to Reuters.

Taiwan's GlobalWafers, which said it has not been notified directly by Washington of any changes to the conditions or terms of their awards, is set to receive $406 million in U.S. government grants for projects in Texas and Missouri. The company is currently set to receive subsidies only after it achieves specific milestones later in 2025.

Each award recipient has distinct terms and milestones in their agreements.

Four sources with knowledge of the discussions told Reuters that the White House is concerned about many of the terms underpinning the $39 billion Chips and Science Act industry subsidies.

Those encompass additional clauses, including requirements added into contracts by the administration of President Joe Biden, that recipients must use unionized labor to build factories and help provide affordable childcare for factory workers.

The White House and the U.S. Department of Commerce did not immediately respond to requests for comment.

Since taking office, Trump has issued a series of executive orders aimed at dismantling diversity, equity and inclusion programs across the federal government and the private sector.

One of the sources said the White House is also frustrated by companies that accepted CHIPS Act subsidies and then announced significant overseas expansion plans, including in China. The law allowed some investments in China.

Intel INTC.O, for example, announced a $300 million investment in a Chinese assembly and test facility in October, after saying in March that it had won a major award under the CHIPS Act.

Many of the biggest recipients of the CHIPS Act funding - including Intel, TSMC 2330.TW, Samsung Electronics 005930.KS and SK Hynix 000660.KS - all have major manufacturing facilities in China.

Intel disclosed it had received two payments totaling $2.2 billion in funding from the CHIPS Act, but declined to comment.

A TSMC spokesperson said the company had received $1.5 billion in CHIPS Act monies before the new administration came in as per the milestone terms of its agreement.

The spokesperson declined comment on any possible changes to its agreement under Trump but said the company is continuing to engage with the Chips Program Office.

Samsung, SK Hynix and Hemlock Semiconductor declined to comment, while Bosch referred Reuters to the Chips Office. Micron MU.O and GlobalFoundries GFS.O did not respond to requests for comment.

(Reporting by Mike Stone and Karen Freifeld in Washington, Fanny Potkin in Singapore, Wen-Yee Lee in Taipei and Stephen Nellis and Max Cherney in San FranciscoWriting by Stephen Nellis and Fanny Potkin; Editing by Chris Sanders and Matthew Lewis)

((Stephen.Nellis@thomsonreuters.com;))

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