President Donald Trump is calling for Congress to get rid of the CHIPS Act. The Biden administration's signature legislation meant to boost semiconductor production and research in the US and ween the country off of its dependence on chips made overseas.

During his address before a joint session of Congress on Tuesday, Trump called the CHIPS Act a "horrible, horrible thing," and claimed that companies that have received funding aren't spending the cash.

The bipartisan CHIPS Act, which was signed into law in 2022, set aside $52.7 billion to fund the construction of semiconductor manufacturing and research facilities across the US. According to The National Institute of Standards and Technology, the US accounts for just 10% of the world's chip production. 

The bulk of chips used in devices ranging from smartphones to laptops to cars, communications, and military equipment is manufactured overseas. That lop-sided equation came into stark relief during the COVID-19 pandemic, when chip plants in other countries were forced to shut down, causing a massive shortage that limited or slowed the sale of a wide array of products for months.

The CHIPS Act was meant to bring manufacturing back to the US with incentives including grants and loans. So far, the Commerce Department has announced more than $36 billion in proposed and allocated funding.

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Intel (INTC), the largest chip manufacturer in the US, has received the largest payout through the CHIPS Act, a $7.9 billion grant that will help the company set up new plants across the country. Samsung, SK Hynix, GlobalFoundries (GFS), Texas Instruments (TXN), and slew of other companies have also received CHIPS Act funding.

During his address, Trump touted TSMC's (TSM) recently announced plan to spend $165 billion on plants at its Arizona chip manufacturing facility. Trump claimed that TSMC is building the facilities without any money from the US.

But TSMC will actually receive $6.6 billion via the CHIPS Act that will support its previously announced $65 billion construction plans in Arizona. On Monday, the company said it would put an additional $100 billion into the facilities, bringing the total price tag for the project to $165 billion.

Trump has previously toyed with the idea of killing the CHIPS Act and levying tariffs on semiconductors built overseas as a means of forcing companies to bring manufacturing back to the US. But shuttering the legislation would also put Intel's plans to build out its manufacturing footprint in danger at a time when the company is attempting to set up a third-party foundry that would build chips for customers similar to TSMC.

Intel, however, is in a precarious position, as reports indicate the Trump administration has proposed breaking out the company's struggling foundry segment and have it run either entirely by TSMC or via consortium of companies, according to The Wall Street Journal.

Regardless of where Intel sits, rescinding the CHIPS Act would risk delaying the construction of chip plants throughout the US and endanger plans to ensure the country has its own robust supply of semiconductors. That said, there's currently no official plant to kill the CHIPS Act .

But as his Department of Government Efficiency (DOGE) searches for was to slash spending, and Trump implements more tariffs, there's a strong possibility he moves forward with the plan.

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Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.

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