In a major shake-up for the U.S. semiconductor industry, the Trump administration has ordered the termination of two-fifths of the staff at the Chips Program Office, which oversees the $52 billion CHIPS and Science Act. This move signals a shift in the direction of U.S. semiconductor policy and raises questions about the future of America’s chip manufacturing ambitions.
Key Developments:
- Staff Reductions: Around 60 employees are affected, with 20 having accepted voluntary resignations and 40 probationary staffers—those employed for less than two years—being terminated. Bloomberg+3Tom’s Hardware+3Daily Tax Report ®+3
- Leadership Changes: Michael Grimes, a former Morgan Stanley banker and associate of Elon Musk, is overseeing the restructuring. Under his direction, the entire external and government affairs team, along with several policy advisers, have been dismissed. Newswav+1Financial Times+1Financial Times+1Newswav+1
- Policy Shift: President Trump has criticized the CHIPS Act, labeling it a “horrible, horrible thing,” and has urged Congress to repeal it. He advocates for using tariffs to incentivize domestic chip production instead of providing direct subsidies. TechStory+2Newswav+2Financial Times+2Investing.com+3TechStory+3Tom’s Hardware+3
- Industry Impact: Major semiconductor companies like Intel, TSMC, and Samsung, which had received substantial funding under the CHIPS Act, have not commented on the recent developments. The future of pending subsidies and ongoing projects remains uncertain. Tom’s Hardware+5Financial Times+5Politico+5Newswav+1Financial Times+1
These actions reflect a significant shift in U.S. semiconductor policy, moving away from subsidy-based incentives toward a tariff-driven approach to encourage domestic manufacturing.
Staff Reductions and Their Implications
According to recent reports from Bloomberg, around 60 employees from the Chips Program Office are set to be laid off by the end of the day. This includes 20 employees who resigned voluntarily, while the remaining 40 staff members, all probationary hires, will be dismissed. These cuts come as part of a broader strategy by the Trump administration to downsize federal agencies.
The Chips Act, signed by President Biden in 2022, aims to bolster U.S. semiconductor manufacturing and research by allocating $52 billion in grants and incentives to companies investing in U.S. chip production. However, Trump has been vocal in his opposition to the Chips Act, labeling it a “horrible, horrible thing.” He argues that instead of direct subsidies, economic tariffs should be used to encourage companies to manufacture chips within the U.S.
The Shift in Policy: From Subsidies to Tariffs
Under the Trump administration, the focus seems to be shifting toward tariffs as the main tool to boost domestic chip production. U.S. Commerce Secretary Howard Lutnick claims that tariffs played a role in securing TSMC’s decision to invest $100 billion in the U.S. with plans to build three new fabs. Lutnick noted, “America gave TSMC 10% of the money to build here,” highlighting the influence of tariffs in this deal.
The push for tariffs instead of direct grants represents a broader policy shift away from the subsidy-based model championed by the Biden administration. This change could have significant implications for companies like Intel and TSMC, which had committed to substantial investments in U.S. chip production under the terms of the Chips Act.
What’s Next for the Chips Act and U.S. Semiconductor Industry?
Despite the ongoing restructuring within the Chips Program Office, the future of the $52 billion initiative remains uncertain. The office has assured that all funds have been contracted out, but the leadership changes and staff reductions could lead to delays or changes in the implementation of the Chips Act’s goals.
Industry analysts are watching closely to see how the administration’s new approach will affect the future of the U.S. semiconductor industry. Will the focus on tariffs and shifting away from subsidies hinder progress? Or will the private sector’s investments, like TSMC’s $100 billion pledge, be enough to ensure that the U.S. becomes a dominant player in semiconductor manufacturing once again?
Conclusion: A Changing Landscape for U.S. Tech Policy
The recent staff reductions at the Chips Program Office reflect the broader changes in U.S. tech policy under the Trump administration. With a focus on tariffs over grants, the future of the Chips Act and the U.S. semiconductor industry could look vastly different than initially anticipated. As the U.S. continues to navigate its role in the global tech race, it remains to be seen how these shifts will impact the long-term goals of strengthening domestic chip production.
Stay tuned as we continue to track developments in the Chips Act and its effects on the U.S. economy and tech sector.
