Reuters reported on August 21 (local time) that the Donald Trump administration is considering reallocating at least $2 billion from the CHIPS Act funds to support critical minerals projects.
According to the report, the Trump administration is reviewing a plan to divert a portion of the funds, originally earmarked by Congress under the CHIPS Act for semiconductor research and factory construction, into critical minerals projects. This would eliminate the need to request new budget expenditures from Congress.
Currently, the Trump administration is working to strengthen the domestic supply chain for critical minerals, which are widely used in the electronics and defense industries, in order to reduce dependence on China.
The $52.7 billion CHIPS Act fund is overseen by the Department of Commerce. One source said that expanding the role of Secretary of Commerce Howard Lutnick in the critical minerals sector could help centralize the administration's related strategies.
Last month, the U.S. Department of Defense announced a $400 million investment in U.S. rare earth company MP Materials, making it the largest shareholder. After questions arose regarding the administration's critical minerals strategy, the White House reportedly encouraged such measures.
Sources explained that since the semiconductor industry also relies heavily on critical minerals such as germanium and gallium, allocating part of the CHIPS Act funds to critical minerals projects could partially align with the intent of the law.
One source stated, "The administration is making creative efforts to find ways to support the critical minerals sector," but added that the plan is still under discussion and could change.
It remains unclear whether the Trump administration will use the $2 billion as subsidies or to acquire equity stakes in companies. However, a source said that Secretary Lutnick plans to spend the $2 billion as soon as possible and is looking to identify other funds for reallocation in the near future.
A former official noted that the previous Joe Biden administration also considered supporting rare earth projects with CHIPS Act funds, but concluded that it was best handled by the Department of Energy due to insufficient economic viability and the need for numerous environmental regulatory exemptions.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
