The Trump administration is reworking deals made with semiconductor makers under the Biden-era CHIPS Act to secure better terms that would bring more investment to the United States, according to Secretary of Commerce Howard Lutnick.
At a Senate Appropriations Committee hearing on Wednesday, Lutnick highlighted a revised deal with TSMC, which received $6.6 billion in direct federal funding under the CHIPS Act in exchange for a commitment to invest $65 billion to build three state-of-the-art factories in Arizona. In March, the Taiwanese company announced it would add $100 billion to its previous pledge, without any extra subsidies from the government.
“We’re getting more value for the same dollars,” Lutnick told Sen. Jeff Merkley (D-Ore.), who asked whether the Commerce Department was withholding CHIPS dollars that had already been awarded.
“Are we renegotiating? Absolutely, for the benefit of the American taxpayer, for sure.”
The bipartisan CHIPS Act, passed in 2022, allocated $53 billion in federal incentives to boost domestic semiconductor research and manufacturing, with the goal of producing 20 percent of the world’s most advanced chips in the United States by 2030. As of 2023, American production accounted for about 12 percent of the global semiconductor supply, and none of the most advanced chips.
Recipients of CHIPS funding include global chipmakers like TSMC, South Korea’s Samsung and SK Hynix, and U.S.-based Intel and Micron. Although the funding was approved under President Joe Biden, much of it had not been disbursed before he left office in January.
According to Lutnick, some of the original grants were “overly generous” and have since been revised to include more favorable terms.
“You will see that all the deals are getting better,” Lutnick told Merkley. “The only deals that are not getting done are deals that should have never been done in the first place.”
President Donald Trump has called on Congress to repeal the CHIPS Act, a proposal that has been met with a mix of opposition and silence from Republicans at both the state and national levels. House Speaker Mike Johnson (R-La.) has not put a repeal vote on the agenda.
In April, Trump issued an executive order to establish a new office within the Commerce Department titled the United States Investment Accelerator. The office is tasked with, among other things, encouraging companies to follow in TSMC’s footsteps and expand their planned domestic semiconductor projects.
Lutnick said at Wednesday’s hearing that companies are already responding with increased commitments.
“Micron offered to go from $20 billion in commitments to $60 billion in commitments,” he said at Wednesday’s hearing, reiterating that it happens without additional federal funding.
At another point of the hearing, Lutnick defended the decision to scrap the so-called AI diffusion rule, which his predecessor Gina Raimondo argued was necessary to keep high-end chips critical for artificial intelligence (AI) under U.S. control.
The rule would have taken effect in May and created new licensing regimes for advanced AI chips, as well as a tiered system for restricting chip sales to “adversaries” like China and Russia. Lutnick dismissed the Biden administration’s approach as “illogical” and being “rushed through” during the final days of the Biden administration.
Instead, the Trump administration is moving to forge individual deals with countries that would allow allied nations to access advanced AI chips under strict conditions.
“Our view is we are going to allow our allies to buy AI chips, provided they’re run by an approved American data center operator, and the cloud that touches that data center is an approved American operator,” Lutnick said.
Bill Pan
Reporter
Bill Pan is an Epoch Times reporter covering education issues and New York news.
