Panic at the chips fabs How Trump could potentially claw back CHIPS funding Chipmakers fear Trump may rescind CHIPS Act funding, report says. Ashley Belanger Mar 11, 2025 12:00 pm | 25 US President Donald Trump speaks during an address to a joint session of Congress in the House Chamber of the US Capitol in Washington, DC, on March 4, 2025. Credit: JIM WATSON / Contributor | AFP US President Donald Trump speaks during an address to a joint session of Congress in the House Chamber of the US Capitol in Washington, DC, on March 4, 2025. Credit: JIM WATSON / Contributor | AFP Story textSizeSmallStandardLargeWidth *StandardWideLinksStandardOrange* Subscribers only Learn moreDonald Trump's sudden decision last week to attack the bipartisan CHIPS and Science Act after he previously offered assurances that he wouldn't has sent shockwaves across the industry and has even given some Republicans whiplash.Soon after Trump told Congress that the CHIPS Act is a "horrible, horrible thing," chip company executives rushed to consult their lawyers to see if Trump could possibly claw back funding or terminate their contracts, eight people familiar with the executives' moves told The New York Times. At least one expert told Ars that their fear isn't completely unfounded.Signed into law by Joe Biden in 2022, the CHIPS Act sought to grant $52.7 billion in subsidies to bring the most advanced chipmakers into the US. The Commerce Department has already signed contracts granting a wide range of awards, including grants for chipmakers like Intel, Micron, Samsung, and the Taiwan Semiconductor Manufacturing Co. (TSMC), totaling more than $36 billion in federal subsidies.Trump has criticized the CHIPS Act, telling Congress last week that companies "take our money" and "don't spend it." At that time, it was clear that TSMCone of the US's biggest CHIPS Act award recipients behind only Intelwouldn't be getting any new awards, but Trump did not confirm any plans to potentially break any billion-dollar contracts.Sources told the NYT that the Semiconductor Industry Association (SIA) reacted to Trump's speech by organizing a call where members reportedly blamed Trump's vitriol for the CHIPS Act on the president's personal disdain for Biden, whose legacy was supposed to be cemented by passing the legislation.Biden's silence has stunned even some Republicans, who balked at his speech and argued that the CHIPS Act is critical for national security.After Trump's speech to Congress, at least one mystified Republican reached out to the White House to clarify Trump's position on the CHIPS Act, the NYT reported. Senator Todd Young (R-Ind.) felt the speech was "in tension" with the Trump administration's prior support. And it seemed that despite Trump directly saying that he wanted to "get rid" of the CHIPS Act, Young wondered if perhaps the president actually meant he wanted to update the law rather than strike it, the NYT reported."If it needs to transform into a different model over a period of time, Im certainly supportive of that," Young said. "But lets be clear, the CHIPS and Science Act, at least the chips portion, has mostly been implemented. It has been one of the greatest successes of our time."The NYT's sources suggested that some changes to grant projects are already underway, potentially stripping provisions the Biden administration emphasized to woo more workers, like hiring unionized construction teams or providing childcare. Those changes reportedly came after the Commerce Department laid off 40 workers in the CHIPS office through a "demeaning" process that forced workers to prove their intelligence by providing SAT or IQ scores or solving math problems like doing long division or calculating "the value of four to the fourth power," sources said.Possible paths to claw back CHIPS fundingIt's possible that Trump could claw back funds, Stephen Ezell told Ars. As vice president for global innovation policy at the nonpartisan nonprofit the Information Technology and Innovation Foundation, Ezell has closely monitored CHIPS funding and advocated for speedier disbursements for companies who need it most.Ezell wrote last September that, contrary to some Republican claims, CHIPS funding isn't a cash cow for chipmakers whose competitive positions he claimed aren't enhanced by taking federal subsidies."No, CHIPS is not a subsidy," Ezell wrote. "Its an attempt to convince semiconductor firms to invest in a place where few would normally invest: the United States. Few rational firms would invest here because costs are higher and government incentives are lower than they are in other markets. In fact, building a new fab in 'Asia' is 30 percent cheaper than building one in the United Statesand its about 50 percent cheaper in China."Ezell told Ars that "the president is legally obligated to spend" money that Congress already fully appropriated through 2026. He estimated that at least 85 percent has already been disbursed.Trump could possibly come for those funds, but the CHIPS Act's claw-back provisions "are only to be triggered for 'non-performance,'" Ezell noted"that is, the company not doing what it promised to do." And although "in theory," Trump could "use rescission or impoundment measures to go after duly Congressionally appropriated and obligated funds," Ezell suggested that seemed "unlikely." Some of the NYT's sources suggested that "many" industry people "also expressed confidence that their legal agreements with the Commerce Department couldnt be changed" on the SIA call.Instead of awarding subsidies, though, Trump wants to punish chipmakers who do business outside the US, threatening to impose tariffs on semiconductor imports potentially as soon as April 2. But that plan may be shortsighted, as the NYT pointed out that "lawyers and industry executives have said that tariffs on chips themselves are not very effective because the United States imports few chips directly." Instead, chips are usually placed into electronic devices and appliances in factories in Asia before the consumer tech is imported into the US.Ezell told Ars that he doubts Republicans can push Trump to pass some new version of the bill, like a CHIPS 2.0. It seems "more likely" that the Trump administration "slow walks some of the disbursements or changes some of the contract terms," Ezell suggested.While companies don't necessarily profit or enhance competitive positions from taking CHIPS subsidies, withdrawing or delaying funding, Ezell warned, could hobble struggling chipmakers like Intel, which some commentators believe got a lifeline through CHIPS funding. In his 2024 analysis, Ezell wrote that Intel's financial struggles should not give cause to deny CHIPS funding, as Senator Rick Scott (R-Fla.) had once urged, but to expedite funding to keep a viable US chipmaker's business expanding in the US."When Intel is fighting for survival, the last thing the Trump administration should be doing is rescinding financing thats critical to Intels recovery and expansion strategy, or to withdraw financing thats vital to other semiconductor companies significant expansion of US operations, from Micron and GlobalFoundries to TSMC and Samsung," Ezell said.Ashley BelangerSenior Policy ReporterAshley BelangerSenior Policy Reporter Ashley is a senior policy reporter for Ars Technica, dedicated to tracking social impacts of emerging policies and new technologies. She is a Chicago-based journalist with 20 years of experience. 25 Comments