Trump Administration Reevaluates Semiconductor Subsidy Agreements

The Trump administration is reassessing subsidy agreements with semiconductor companies benefiting from a program initiated by the previous president, Joe Biden. The move comes as current officials consider the subsidies too generous and aim to renegotiate for taxpayer benefit.

Background: The Chips Act

In 2022, then-President Biden signed the “Chips Act,” authorizing up to $39 billion in subsidies for companies to build chip manufacturing plants in the U.S. Funds were quickly allocated as his term ended. However, many companies received limited financial support.

Reevaluation by the Trump Administration

This week, U.S. Commerce Secretary Howard Lutnick highlighted in a Senate address that the previously set subsidy amounts appeared overly generous. The administration is revisiting agreements to better serve American taxpayers, with some deals being canceled for their inadequacy and others improved through renegotiation.

An example cited was the agreement with Taiwanese firm TSMC, which initially received $6 billion in subsidies. With the change in administration, TSMC has committed to increasing its investment in Arizona from $65 billion to $165 billion, while maintaining its subsidy level. This renegotiation is seen as a significant win for the U.S. government.

Future Plans for AI Infrastructure

Additionally, Secretary Lutnick confirmed the U.S. plan to retain over 50% of global AI computing capacity domestically. This announcement aligns with recent deals with the UAE and Saudi Arabia to develop their computational infrastructures.