More doubt is being cast over the US CHIPS Act program with the Trump administration threatening to halt payments unless companies in line to receive funding commit to substantially expand their own investments.

resident Donald Trump has issued an Executive Order to establish a new office within the Department of Commerce titled the United States Investment Accelerator.

The office's aim is "to encourage companies to make large investments in the United States," and among its powers will be oversight of the CHIPS Program to maximize the benefits for taxpayers, the White House states.

This move follows earlier calls by President Trump to scrap CHIPS Act funding entirely, and any remaining money to be allocated to cutting federal debt.

According to reports, Secretary of Commerce Howard Lutnick has indicated that he intends to withhold CHIPS Act grants already agreed in order to push the companies involved to substantially expand the projects they have planned.

The aim is to force semiconductor makers promised grants and subsidies for building new manufacturing facilities on American soil to invest even more, without increasing the size of federal grants. This follows the example of TSMC, which earlier this month pledged to spend $100 billion to expand its US fabrication plants.

However, that $100 billion figure disclosed by TSMC chief CC Wei during his meeting with Trump was merely an estimated price tag for plans the company had in the pipeline anyway. Intel's former boss, Pat Gelsinger, also pointed out recently that while TSMC is building fabs in the US, it is keeping its research and development in Taiwan.

"If you don't have R&D in the US, you will not have semiconductor leadership in the US," Gelsinger said at the end of last week.

His old company finalized an agreement with the Department of Commerce in November to receive up to $7.86 billion from the CHIPS Act, which would make it the largest beneficiary of the federal government's cash, if it actually receives it all.

That was also conditional on Intel retaining control of its foundries, amid talk that the troubled Santa Clara-based biz was potentially looking to spin them off as part of a restructure. Intel has since announced it is delaying some of its fab buildout, such as pushing back the completion of its $28 billion Ohio plant until at least 2030.

Gelsinger had previously stated that without CHIPS Act funding, Intel would continue to build new fabs in Arizona and Ohio, however the expansion would take longer, and it wouldn't be as comprehensive.

Along with import tariffs on chips, the tough approach the Trump administration is taking with semiconductor makers is likely to lead to more uncertainty in the tech industry. This has already caused mayhem in the PC business, with costs increasing and customers rethinking purchases.

Richard Gordon, Vice President and Practice Lead, Semiconductors, The Futurum Group, referred to AMD's Lisa Su's comments about the impact of tariffs, remarking that Su appeared to be "waiting to see how things pan out in the coming weeks / months before coming to any major conclusions ... and I think that's the only sensible way to deal with Trump."

Gordon added: "The threats about withholding CHIPS Act Funding are largely rhetorical and designed to keep up the pressure on the US semis companies IMO. I think the threats are unnecessary and won't make much difference because US companies are already rapidly re-shoring, as Lisa mentions...

"In terms of investment generally, it's always been my view that semis companies will invest regardless of government handouts because if they don't they won't be around for long. It's nice to have handouts and companies will gladly accept them (depending on the strings attached) but often they only serve to prop up weaker companies."

In addition to overseeing the CHIPS Act, the Investment Accelerator office will try to cut through bureaucracy to ensure that businesses can quickly deploy capital and create jobs, according to the White House.

"By streamlining processes, the Accelerator will attract both foreign and domestic investment, reinforcing America's position as the premier destination for large-scale investment," it claimed.

well as scrapping some subsidies previously agreed, the Commerce Secretary may consider initiating a separate 25 percent tax credit from the CHIPS Act.

By: DocMemory
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