Why Does Trump Dislike the CHIPS Act?

In his address to Congress last week, President Donald Trump suggested undoing one of the cornerstones of former President Joe Biden’s legislative legacy—the CHIPS and Science Act.

“Your CHIPS Act is a horrible, horrible thing,” said Trump.

But why does Trump hate it so much?

The CHIPS and Science Act was one of Biden’s main legislative accomplishments—a massive $280 billion funding bill meant to move semiconductor production to the United States. 

Heritage Foundation tech policy researcher Wesley Hodges told The Daily Signal that the CHIPS Act’s sales pitch was twofold—to protect American strategic interests and to bring manufacturing back to the United States.

“The pitch behind the CHIPS Act was to do a public-private partnership that aligned the country’s national security and competitiveness priorities with the interests of the technology companies developing these things,” said Hodges.

Semiconductors are electricity conductors that are essential to the functioning of almost any modern electronic technology.

The act’s supporters argued it would boost the economy and give America more control of the manufacturing of semiconductors.

But the CHIPS Act hasn’t won universal praise since it was enacted in 2022.

“It certainly hasn’t lived up to its biggest promises,” Hodges, the acting director of Heritage’s Tech Policy Center, told The Daily Signal.

“It certainly is racked with delays and dubious questions on how a lot of the money is being directed. There are allegations of inside dealings there and catering to Wall Street interests instead of the Congress’ desire, which is the long-term technological growth of this industry.”

Multiple CHIPS Act projects have run into difficulties. For example, Intel, which received billions from the Biden administration to construct a semiconductor plant in Ohio, delayed the plant’s construction until the 2030s amid heavy financial losses at the company.

Hodges told The Daily Signal that those difficulties may be the symptom of America’s long-term deindustrialization.

“Other countries that we’ve become dependent on for the production of these chips have cultivated their workforce for decades to do this,” he said, adding: “We used to have this. Intel used to deliver the chips to the world, and it just turns out, if you wait a generation or two, you can eradicate your competency to be able to manufacture.”

Now, Trump argues that there’s no need to subsidize semiconductor manufacturing if the administration can use tariffs to force companies to manufacture in the United States.

“Just yesterday, Taiwan semiconductor, the biggest in the world, most powerful in the world … announced a $165 billion investment to build the most powerful chips on earth, right here in the USA. And we’re not giving them any money,” said Trump in his Feb. 4 address to Congress.

David Ditch, a senior analyst at the Economic Policy Innovation Center in Washington, says he finds Trump’s case compelling.

“As it turned out, the CHIPS Act wasn’t even necessary because, as President Trump touted in his speech, the Taiwanese company is going to be producing a big plant in the U.S. without the CHIPS Act subsidies,” said Ditch, adding:

Again, to me, if there’s a sector of the economy where there’s big opportunity, we should trust that businesses will invest there.

“Your CHIPS Act is a horrible, horrible thing … . They will come because they won’t have to pay tariffs if they build in America,” Trump explained in his speech.

Trump then recommended that Speaker of the House Mike Johnson, R-La., undo the CHIPS Act.

“You should get rid of the CHIPS Act. And whatever’s left over, Mr. Speaker, you should use it to reduce debt or any other reason you want to.”

One prevailing Republican criticism has been against the CHIPS Act’s “woke” criteria for granting subsidies. 

Speaking in the Oval Office after his address, Trump criticized the CHIPS Act for stringent diversity requirements, which he says makes it nearly impossible to find an eligible company to build a semiconductor factory.

“I don’t even think anybody can qualify,” said Trump. “They have so many different categories in order to qualify. You have to have so many of a certain race, a certain gender.”

In June 2024, Sen. Tommy Tuberville, R-Ala., accused the CHIPS Act of being dysfunctional owing to diversity and environmental requirements placed on manufacturers. 

“The CHIPS Act has potential, but it needs reforms to become effective,” wrote Tuberville. He recommended “removing the woke regulations that have nothing to do with job creation.”

The Alabama lawmaker proposed an amendment to the act that would remove diversity-related requirements.

Ditch, a former federal budget analyst for The Heritage Foundation, told The Daily Signal that he opposed the act on similar grounds.

“It was misguided when it passed, and it has failed to live up to even my already low expectations,” Ditch said.

“They wanted each of these manufacturers to have a climate and environmental responsibility plan. They wanted Project Labor Agreements, which is to say carve-outs for unions. They wanted environmental justice remedies, and environmental justice is an intersection between climate change and race politics,” he explained.

But Trump’s push against the CHIPS Act may run into some speed bumps. 

“The truth is, I doubt Congress will repeal CHIPS,” Sen. Josh Hawley, R-Mo., who opposed the act, told The Epoch Times. “I suppose the president could ask for the funding to stop. The money is in various states of disbursement.”

Ditch concurred, saying, “I think we do need to ditch the CHIPS Act if possible. I don’t know how likely it is that that would happen, because so much of the money has already gone out the door. And I don’t know [how] any of it can be clawed back.”

However, Sen. Todd Young, R-Ind., who helped introduce the CHIPS Act to the Senate, said he was open to working with Trump to address his criticisms of the act.

A spokesperson for Young’s office told The Daily Signal in a written statement, “Senator Young has had good conversations with the administration about the many successes and future of the CHIPS program and how it helps with our shared goal of creating a robust domestic chips supply. He is open to working with the administration on changes to the law.”

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