The Trump administration is advancing efforts to amend the CHIPS and Science Act, an initiative that set aside $53 billion to rebuild semiconductor manufacturing capabilities in the USA.
According to Reuters, the proposed changes focus on tightening the conditions for federal grants, introducing stricter transparency requirements, and limiting outsourcing to regions deemed security risks, such as China. The move underscores the administration’s goal to align semiconductor funding with national interests, ensuring it supports U.S. economic growth and technological independence.
CHIPS Act Faces Calls for Greater Accountability
The CHIPS and Science Act was enacted in August 2022 to address the nation’s reliance on foreign chipmakers, particularly those in East Asia. While its $53 billion budget aims to revitalize domestic production, critics argue that existing policies have allowed companies to circumvent some of its key objectives.
Under the proposed amendments, grant recipients will need to provide detailed plans outlining how funds will be used to expand U.S.-based operations, while outsourcing advanced chip production to foreign entities could face new restrictions.
For example, Intel’s decision to outsource Arrow Lake chip production to Taiwan Semiconductor Manufacturing Company (TSMC) has sparked debate. While outsourcing allows Intel to leverage TSMC’s advanced manufacturing capabilities, it also raises concerns about the reliance of U.S. companies on foreign supply chains.
These proposed rules could force semiconductor firms to rethink their strategies as they navigate increasingly stringent requirements.
Intel’s Role in U.S. Semiconductor Policy
Intel has been one of the biggest beneficiaries of the CHIPS Act, receiving $7.86 billion in federal grants to expand facilities in Ohio, Arizona, and New Mexico. These facilities are expected to support the production of advanced chips for artificial intelligence (AI) and high-performance computing systems.
To comply with the funding rules, Intel has committed to reinvesting the funds into operational improvements instead of stock buybacks. However, Intel’s reliance on TSMC for its most advanced products, such as the Arrow Lake processors, has drawn scrutiny as the U.S. seeks to strengthen its domestic supply chain.
The company’s focus on advanced technologies, including its RibbonFET transistor architecture, reflects its strategy to remain competitive in the global semiconductor market.
RibbonFET, which improves energy efficiency and performance by enclosing a ribbon-shaped channel with the gate, represents a key component of Intel’s future chip designs. This innovation could play a critical role in supporting U.S. technological leadership in areas like AI and cloud computing.
Global Semiconductor Race Intensifies
While the U.S. works to tighten its semiconductor policies, other global players are advancing their strategies. China, for instance, has committed over $96 billion to its domestic semiconductor industry, aiming to reduce dependence on Western technology. As part of this effort, Beijing is focusing on chips for electric vehicles, renewable energy systems, and consumer electronics.
However, U.S. export restrictions have hindered Chinese manufacturers, such as Huawei, from advancing beyond 7nm chip nodes, creating significant challenges for China’s broader semiconductor ambitions.
Meanwhile, Europe is investing heavily in its own semiconductor industry through the €43 billion European Chips Act, which aims to develop independent production capacity and reduce reliance on imports.
Intel’s planned semiconductor facility in Germany is a critical part of this strategy, but delays caused by logistical challenges and funding gaps have complicated the EU’s ambitions. Read more about Intel’s related German chip plant delays here.
Addressing Workforce and Infrastructure Gaps
One of the critical challenges facing the CHIPS Act is the lack of skilled labor and slow progress in building infrastructure to support domestic semiconductor production.
The National Semiconductor Technology Center (NSTC), envisioned as a hub for research and development collaboration among government, academia, and private companies, has seen delays in its establishment. These delays have raised concerns about whether the U.S. can fully leverage CHIPS Act funding to rebuild its semiconductor sector.
Grant recipients may also face new conditions under the proposed revisions, requiring investments in workforce development and regional economies. For example, companies receiving federal funds could be tasked with creating training programs to address the skilled labor shortage.
While these measures aim to ensure long-term benefits for local communities, they could introduce additional hurdles for companies already navigating a complex regulatory environment.
Critics of the CHIPS Act argue that without stricter oversight, the program risks failing to meet its original goals. They say while the CHIPS Act represents a major opportunity to revitalize U.S. semiconductor production, without proper oversight, there’s a real risk that the funds may not achieve their intended impact.
Intel’s Financial Pressures and Strategic Goals
Despite being a central player in the U.S. semiconductor strategy, Intel faces mounting challenges. In 2024, the company reported a significant drop in revenue alongside total losses exceeding $18 billion. Intel’s Gaudi AI accelerators, developed to compete with Nvidia in the AI hardware market, have struggled to gain traction, further highlighting the competitive pressures the company faces.
Nvidia’s dominance in the AI sector was underscored when it replaced Intel on the Dow Jones Industrial Average in Novemer 2024 and Intel ousted former CEO Pat Gelsinger.
To regain its competitive edge, Intel is betting on innovations like RibbonFET technology, which enhances chip performance and efficiency by enclosing the transistor gate around ribbon-like channels. This advancement is expected to be pivotal for Intel’s success in high-demand markets such as AI and cloud computing.
However, the company’s reliance on foreign manufacturing partners like TSMC remains a sticking point as policymakers push for greater domestic production.
The Geopolitical Stakes of Semiconductor Policy
The global race to dominate semiconductor production underscores the geopolitical importance of chips in shaping national security and economic power. For the U.S., the CHIPS Act represents a key strategy to secure its supply chains and reduce reliance on overseas manufacturers. At the same time, China and Europe are advancing their own semiconductor policies, heightening the competition for technological supremacy.
China’s semiconductor strategy, backed by significant government funding, aims to challenge U.S. and European dominance. However, its progress has been slowed by the growing export restrictions, which have prevented Chinese firms from accessing cutting-edge chipmaking equipment.
Similarly, Europe’s semiconductor efforts face obstacles, as delays in key projects like Intel’s German facility show the difficulties of building independent production ecosystems.
As the Trump administration seeks to tighten oversight of the CHIPS Act, the outcome of these revisions will determine how effectively the U.S. can position itself as a leader in the semiconductor industry.
