As the U.S. election approaches, the future of the CHIPS Act—a major legislative effort to revitalize domestic semiconductor production—hangs in the balance.
Passed two years ago, the CHIPS and Science Act is a $52.7 billion initiative designed to strengthen the United States’ semiconductor manufacturing and research capabilities. With $39 billion allocated for chip manufacturing and $13.2 billion set aside for research and workforce development, the Biden administration has positioned the act as a cornerstone of its industrial policy. However, the results of the election could significantly impact this landmark legislation.
Political Uncertainty Looms
As polling suggests a tight race between former President Donald J. Trump and current Vice President Kamala Harris, many are speculating on what either outcome might mean for the semiconductor industry. Trump has openly criticized the CHIPS Act, calling it “a bad deal,” and has advocated for tariffs as a means of boosting domestic chip production. In contrast, the Biden administration has championed the Act as a vital tool to reduce America’s dependence on foreign-made semiconductors, especially from China.
Moreover, House Speaker Mike Johnson recently hinted at potential GOP efforts to repeal or amend the Act, although he later backtracked on those comments following pressure from fellow Republicans. The uncertainty surrounding the act’s future is causing ripples across the semiconductor industry, with some companies delaying investment decisions until after the election.
Key Impacts of a Repeal
If the CHIPS Act were to be repealed or significantly altered, it could have far-reaching consequences for the U.S. semiconductor supply chain. The Act aims to create jobs, reduce reliance on overseas manufacturing, and bolster U.S. technological leadership. A repeal could not only affect current projects but also slow down future innovations in AI, autonomous vehicles, and other emerging technologies that rely heavily on advanced chips.
This could also disrupt funding for ongoing projects, including those aimed at addressing the growing data accessibility challenges that are crucial for AI-driven industries. Without the CHIPS Act’s backing, the U.S. might see a decline in its ability to support the high-tech infrastructure needed for AI and other critical advancements.
The Role of Tariffs
Trump’s proposal to impose tariffs as a solution to boost domestic chip production has garnered mixed reactions. While tariffs could, in theory, make foreign-made chips more expensive and incentivize domestic production, many experts argue that they could also raise costs for U.S. manufacturers relying on imported semiconductors. This may ultimately hurt the very industries the CHIPS Act was designed to support, such as automotive, consumer electronics, and defense.
Moreover, tariffs could complicate U.S. trade relations with key partners while not necessarily guaranteeing a shift in semiconductor production back to the U.S. In a global economy, such protectionist measures could have unintended consequences, potentially driving up consumer prices and slowing down technological progress.
What’s at Stake?
At its core, the CHIPS Act is about more than just manufacturing semiconductors. It represents a broader attempt to secure America’s technological future. With industries like AI, autonomous vehicles, and 5G all dependent on advanced semiconductor technology, the stakes are incredibly high. The outcome of the election could either propel the U.S. forward or set back its bid to reclaim leadership in the global tech race.
For now, all eyes are on the election results. Whether the CHIPS Act survives, gets amended, or is repealed, the semiconductor industry—and by extension, the future of U.S. technological leadership—remains uncertain.
