Trump Official Warns They're Putting The Squeeze On CHIPS Act Winners

Chipmakers waiting on billions of dollars of CHIPS Act funding should be prepared to return to the negotiating table, US Commerce Secretary Howard Lutnick suggested during a Senate hearing this week.

The $53 billion funding bill, which sought to reinvigorate domestic semiconductor manufacturing, has been a point of contention for President Trump, who has previously called for the CHIPS Act to be scrapped and the cash used to settle the national debt.

Although chipmakers like Intel, TSMC, and Samsung have committed to more than $100 billion in manufacturing projects across the US, Trump's commerce head complained that taxpayers weren't getting enough bang for their buck.

We are planning to distribute money only if we get much more building in America

"We are planning to distribute money only if we get much more building in America," Lutnick said.

Lutnick pointed to Taiwan Semiconductor Manufacturing Co, which was slated to receive $6.6 billion in CHIPS funding for a pair of wafer plants in Arizona valued at $65 billion, as a prime example.

Under pressure from the Trump administration, TSMC said in March it would invest an additional $100 billion to expand its Arizona campus including the construction of three new fabrication plants, two advanced packaging facilities, and research and development.

"I think commitments of 4 percent or less are more appropriate than a 10 percent funding — it just seemed overly generous — and we've been able to renegotiate them," Lutnick said, praising the additional commitment. "The only deals that are not getting done are deals that should have never been done in the first place."

Lutnick's strategy appears to be working. On Wednesday, GlobalFoundries said it would funnel another $3 billion into US semiconductor production, bringing its total investment to more than $16 billion. Last year, GlobalFoundries was awarded $1.5 billion in funding under the CHIPS Act.

Many of these projects won't be completed until after Trump's second term is over. For example, TSMC's second Arizona chip plant isn't expected to enter volume production until sometime in 2027 or 2028.

So, while chipmakers may say they're committing to larger, more ambitious projects to safeguard their CHIPS awards, they could always scale them back later if the political winds shift again.

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Speaking with senators, Lutnick also downplayed concerns over China's growing semiconductor industry.

"Currently we're making 200,000 wafers and we have a demand of 10 million. Now, the deal that I made with TSMC… increases that; we'll have 1.2 million wafers. So, we'll be at about 12% of our demand." Lutnick said.

A single wafer can contain anywhere from a few dozen chips to several hundred, depending on their size and complexity.

By comparison, Lutnick estimates that China only has the means to produce about 200,000 high-end chips. However, recent reports regarding shipments of Huawei's homegrown Ascend accelerators would appear to undermine that claim. ®