Trump Promised to Repeal the CHIPS Act... But the Likelihood of Action Is Low

"The bill will be amended but not withdrawn"

Donald Trump, the President-elect of the United States, has pledged to repeal the Biden administration's semiconductor support law (CHIPS Act), but CNBC reported on the 7th that the likelihood of him actually taking action is low.

During his campaign, Trump criticized the CHIPS Act several times. Although he later retracted his statements, Republican House Speaker Mike Johnson also said that the Republican Party would probably try to repeal the CHIPS Act.

Former President Donald Trump elected in the U.S. presidential election Photo by Getty Images Yonhap News

However, semiconductor experts predict that the CHIPS Act is likely to survive in the short term.

Paul Triolo, Senior Vice President and Head of China Practice at Albright Stonebridge, appeared on CNBC's "Squawk Box Asia" that day and said, "While President-elect Trump said he is 'not happy' with the CHIPS Act, he probably will not retract it." He added, "There will be support for this kind of advanced manufacturing onshoring (relocation of production facilities to the home country)."

The Biden administration signed the CHIPS Act in August 2022 after bipartisan agreement to invest about $53 billion in semiconductor manufacturing and research within the United States to strengthen America's competitiveness in the semiconductor sector. Through this, TSMC and Samsung Electronics are set to receive $6.6 billion and $6.4 billion respectively. The biggest beneficiary is Intel in the U.S., which will receive $8.5 billion.

Last month, President-elect Trump criticized the CHIPS Act in an interview with popular podcaster Joe Rogan. He said, "We gave billions of dollars to wealthy companies to borrow money and build semiconductor companies in the U.S., but these companies will not give us good companies anyway," and argued that his pledge to raise tariffs could attract semiconductor companies to the U.S. without separate spending.

However, experts expect that President-elect Trump may revise some priorities and fund allocations of the bill, but most of it will remain intact.

Adam Posen, President of the Peterson Institute for International Economics (PIIE), also said on "Squawk Box Asia" that day, "The Trump administration will probably try to reinterpret the law to distribute money a little differently from the Biden administration, but it does not seem likely to repeal the law."

Posen explained that maintaining the CHIPS Act is similar to President Joe Biden keeping the Trump administration's China tariffs despite shifting policy focus to industry at the start of his term. However, he added, "I think the tariff area will expand more than industrial policy."