Experts: Chips Act Programs Will Continue Despite Trump Campaign Claims
The Chips and Science Act of 2022, which has successfully funded the launch of U.S. facilities where chips are made, and it's unlikely President Donald Trump will reverse its work, experts said Wednesday during a Broadband Breakfast webinar. Trump was sharply critical of the act as a presidential candidate, saying that subsidies were a bad idea (see 2412090046).
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The Chips Act's support in Congress was evident in November, when House Speaker Mike Johnson, R-La., noted interest in having the House repeal it, but reversed course in the face of bipartisan opposition (see 2411040062). The most sophisticated chips are a focus of U.S. carriers, which need them in smartphones and other devices on their networks, experts said Wednesday.
“There’s very much a path forward for success” for the Chips Act under the new administration, said Mimi Strobel, Nokia senior director-policy and government relations. However, she expects an “initial pause," as there will be for almost all federal programs. “The Chips Act will be one where we [will] see a pretty quick pickup” and a sense of “let’s keep this rolling.”
Trump has said he wants to eliminate many government programs, and attacks on the Chips Act are part of a push by some “political figures” to “roll back everything,” Strobel acknowledged. “I don’t think that they really had a full understanding” of what the Chips Act will do, she added.
While the act was approved during the administration of former President Joe Biden, work started on it in the first Trump presidency, Strobel noted. Its goals include “shoring up U.S. manufacturing” and “increasing competitiveness in U.S. science and technology,” she said. “Those are goals that are completely aligned with what President Trump wants.” Building a fabrication facility in the U.S. is more expensive than doing so in Taiwan, she acknowledged. “Over the past 30 years, manufacturing on U.S. soil has moved elsewhere. How do we move that manufacturing back to the United States?”
“Overall, the Chips Act has really been a tremendous success,” said Stephen Ezell, vice president-global innovation policy at the Information Technology and Innovation Foundation. From 1990 to 2020, the U.S. share of global semiconductor manufacturing declined from 30% to 12%, he said. As a result of the Chips Act, about 20% of leading-edge chips are expected to be made in the U.S. in 2030.
The government has already provided $33 billion in grants and made a combined $5.5 billion in loans to 31 companies across 40 projects, and 17 new fabs are under construction in the U.S., Ezell said. The U.S. has seen $450 billion in investment in the U.S. chips and electronics ecosystem over the past four years, which is more than in the previous three decades combined, he added.
The money was already appropriated to fund initial projects, but more will be needed to meet U.S. goals, Strobel said. As a company without a fab, Nokia also sees the act's $11 billion in R&D money as critical, she said.
The Chips Act rightly encourages investment by companies from countries including Taiwan and South Korea, said Gary Hufbauer, nonresident senior fellow at the Peterson Institute for International Economics. “Foreign firms are absolutely critical to this manufacturing,” he said.
Biden Commerce Secretary Gina Raimondo said in December that she hopes Trump won’t try to roll back the Chips Act. “Sometimes you say things on the stump, and I can only hope that was something to be said on the stump and won’t be acted out.”