US Chip Policy Upheaval Has Asian Chip Giants on Tenterhooks

Reports that the Trump Administration is moving to gut the agency responsible for disbursing tens of billions of subsidies for top chipmakers to set up operations in the US has rocked some of the biggest companies in north Asia.

Chipmaking giants such as TSMC (Taiwan Semiconductor Manufacturing Co), plus Korea’s Samsung Electronics and SK Hynix have been on tenterhooks, closely following developments in the US given Trump’s abrupt change of policy and blunt remarks that the island had “stolen” the US chip industry.

News has since emerged that the new regime in Washington is preparing to sack hundreds of “probationary” employees at the National Institute of Standards and Technology (NIST), a body overseen by the Commerce Department, most of them allegedly involved in the CHIPS and Science Act. Some of these workers were reportedly told last week their jobs would be axed.

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A report by SemiWiki, a forum for chip professionals, said this week: “The vast majority of those to be terminated at NIST are associated with the CHIPS Act as they are the most recently hired, with most of them being hired in the last year as Biden ramped up the CHIPS Act on his way out the door.

“If there are no employees left to administer the CHIPS Act programme, it is dead by default as there is no one left to certify that companies have met their requirements let alone write the checks. Basically the programme will cease to exist.”

‘Deals to be renegotiated’

The White House is seeking to renegotiate awards handed out under the Act, a high-profile programme implemented by the Biden Administration, and has signalled delays to some upcoming semiconductor disbursements, two sources familiar with the matter told Reuters earlier this month.

TSMC, Samsung and Hynix were all recipients of funding under the Act.

TSMC, the world’s biggest contract chipmaker, received $1.5 billion under the CHIPS Act. It is spending $65 billion in Arizona to set up three fabs and has already begun producing some of its most advanced chips at one of the facilities. The chipmaker has been promised $6.6 billion worth of subsidies for its Arizona plants.

A reconsideration of incentives awarded to the companies would be big setback to their work setting up semiconductor fabrication plants (fabs) in the US.

Samsung, which is Korea’s biggest chipmaker, is due to receive $6.4 billion in grants under the Chip Act in lieu of setting up two fabs in Texas. The company is investing $40 billion in those facilities.

SK Hynix has also been promised $458 million in funding and up to $500 million in loans for its near $4 billion investment in Indiana. Neither of these three chipmakers wanted to comment publicly about the rejig of agreements with the US government.

GlobalWafers, another Taiwanese firm, which is the world’s third largest silicon wafer supplier, is set to receive $406 million in US government grants for projects in Texas and Missouri. It is currently due to receive subsidies only after it achieves specific milestones later in 2025.

“The CHIPS Programme Office has told us that certain conditions that do not align with President (Donald) Trump’s executive orders and policies are now under review for all CHIPS Direct Funding Agreements,” GlobalWafers spokesperson Leah Peng said in a statement to Reuters.

Taiwan giving TSMC to the US: China

Given the upheaval in the sector, it is perhaps not surprising Beijing has waded into the debate about TSMC and other chipmakers’ dealings with the US, given they are a topic of much concern on Taiwan.

China said on Wednesday that Taiwan was seeking to give away the island’s semiconductor industry to the United States as a “souvenir” and leverage it to seek political support from Washington, according to Reuters.

Speaking at a regular news conference in Beijing, Zhu Fenglian, spokesperson for China’s Taiwan Affairs Office, said, without offering evidence, that people in Taiwan were concerned TSMC could become “United States Semiconductor Manufacturing Co”.

“In order to seek selfish gain, the Democratic Progressive Party authorities have freely made demands from external forces, using Taiwan’s semiconductor industry and powerful companies to get a foot in the door to relying on foreign countries to seek independence, and even give them away as souvenirs,” Zhu said, referring to Taiwan’s ruling party.

While China claims democratically governed Taiwan as its own territory, despite the strong objections of the government in Taipei, Beijing has no say in foreign investment approval decisions by Taipei.

Zhu said Taiwan was trying to “sell out” Taiwanese companies. “This sort of shameless selling out of Taiwan is in actuality pandering to the United States,” she said.

Taiwan’s Mainland Affairs Council said in a statement that TSMC was an “important Taiwanese company”.

“In response to the challenges posed by Trump’s new policies towards our semiconductor industry and TSMC, our government will work closely with industry to maintain Taiwan’s leading position in the field of advanced technology,” it said, without elaborating. TSMC declined to comment.

AI safety programmes also at risk

Meanwhile, staff at the US Artificial Intelligence Safety Institute – responsible for testing and assessing advanced AI systems, as well as setting standards – also face the risk of losing their jobs.

new Commerce Secretary Howard Lutnick said at his confirmation hearing that he plans to review Biden’s chips programmes, plus the department’s AI initiatives, as AI policy is also changing, from the previous risk-based approach to one that aims to promote innovation.

The SemiWiki report said computer security and anti-hacking programmes were likely to be targeted for job cuts. “AI safety programmes at NIST appear to be impacted as well.”