CHIPS Act Under Trump: Uncertainty and Opportunity

The CHIPS Act, a bipartisan effort to boost U.S. semiconductor manufacturing, is poised to reshape the industry but faces uncertainty under a Trump administration. The act, signed into law by President Biden, committed almost $53 billion to invest in domestic semiconductor manufacturing and research, aiming to bolster U.S. competitiveness with China. However, as the 2024 U.S. presidential election nears, the future of the CHIPS Act under a new Trump administration remains uncertain.

Trump's proposed tariff increases on semiconductor imports, up to 50% and 60% respectively, could significantly impact CHIPS Act beneficiaries like Intel and TSMC. Higher tariffs may lead to increased costs for these companies, potentially offsetting some of the benefits from the billions in grants they receive. This could make their U.S. operations less competitive, as they may struggle to pass on these additional costs to consumers. Additionally, these tariffs could discourage foreign companies from building new facilities in the U.S., as they would face higher production costs. This could slow down the CHIPS Act's aim to boost domestic semiconductor manufacturing and research.

The CHIPS Act under a new Trump administration may see modifications that could weaken or strengthen domestic competitiveness. One potential change is a rollback of incentives, which could impair U.S. semiconductor manufacturing competitiveness and jeopardize investments in onshore production, leaving companies vulnerable to intensified global competition. Alternatively, Trump may uphold the CHIPS Act, as experts expect, despite his campaign rhetoric, which could strengthen domestic competitiveness. The future of the CHIPS Act under a Trump administration remains uncertain, but the industry should prepare for potential changes to strengthen its resilience.



Given the uncertainty surrounding Trump's policies, investors should evaluate the long-term prospects of CHIPS Act beneficiaries by considering companies' operational agility, management robustness, and ability to adapt to potential policy shifts. TSMC, Intel, and Samsung, current beneficiaries, must prove their adaptability to thrive under evolving trade policies and supply chain disruptions.

In conclusion, the CHIPS Act presents a significant opportunity for the U.S. semiconductor industry, but its future under a new Trump administration remains uncertain. While Trump's proposed tariff increases could complicate funding allocation and U.S. semiconductor manufacturing, companies can adapt their strategies to mitigate risks. Investors should stay informed about policy changes and focus on companies with strong management and enduring business models to capitalize on the long-term potential of the CHIPS Act.