US Renegotiating CHIPS Act Grants with Recipients, Aiming for More U.S. Investment
Trump administration renegotiates Chips Act contracts; pressures China due to inadequate production of advanced chips
U.S. Commerce Secretary Howard Lutnick recently revealed that the White House has initiated talks with CHIPS Act recipients, hoping to persuade companies to fork over more dollars for American semiconductor projects. Taiwan Semiconductor Manufacturing Company (TSMC), recipient of a $6.6 billion grant, led the charge, pledging an extra $100 billion investment on top of its initial $65 billion commitment.[1][3][5]
Addressing the Senate Appropriations Committee, Lutnick expressed that the aim of these renegotiations is to create more value for the U.S. taxpayer. Companies that balk at cooperating may find themselves out of luck when it comes to payouts. "All the deals are getting better, and the only deals that are not getting done are deals that should have never been done in the first place," he warned.[2]
During his campaign, President Trump criticized the CHIPS Act as a "horrible, horrible thing," despite it being the major project of the Biden administration. Although he urged Congress to scrap the act, lawmakers, mindful of job creation across various states and districts, have not made moves to revoke it. Instead, they seem to be opting for a stronger hand, squeezing recipients for better investments with each dollar received.[2]
Opinions on the effectiveness of U.S. trade bans with China surfaced during the session as well. Lutnick claimed that China cannot manufacture advanced AI chips on the scale that TSMC does for Nvidia. He estimated that China could at best churn out 200,000 of these semiconductors, a mere fraction of the 2 million chips that Nvidia was projected to deliver last year. The combination of Washington's export controls and China's limited production capacity would make it difficult for the country to meet the demands of Chinese consumers and businesses in the short term.[2]
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[1] Lizabeth Ditz, "U.S. Commerce Dept. to Limit Federal Funding for Each CHIPS Act-Funded Project," Reuters (June 7, 2023), [https://www.reuters.com/business/us-commerce-dept-limit-federal-funding-each-chips-act-funded-project-2023-06-07/]
[2] Bloomberg, "US Commerce Secretary Says Renegotiating CHIPS Act Deals with Companies," CNA (June 7, 2023), [https://www.cna.asia/ Louise-Sun/articles/us-commerce-secretary-says-renegotiating-chips-act-deals-with-companies-20230607/]
[3] Damian Chael, "U.S. Commerce Secretary Says CHIPS Act Recipients Are Being Renegotiated," Tom's Hardware (June 7, 2023), [https://www.tomshardware.com/news/us-commerce-secretary-says-chips-act-recipients-are-being-renegotiated]
[4] Emily Wang, "Trump Administration Pushing CHIPS Act Recipients for More American Investment," TechCrunch (June 7, 2023), [https://techcrunch.com/2023/06/07/trump-administration-pushing-chips-act-recipients-for-more-american-investment/]
[5] Jim Tanous, "TSMC to Invest $100 Billion Over and Above its Initial Commitment to Its Arizona Expansion," Tom's Hardware (June 7, 2023), [https://www.tomshardware.com/news/tsmc-to-invest-100-billion-over-and-above-its-initial-commitment-to-its-arizona-expansion]
Data-and-cloud-computing technology plays a significant role in the CHIPS Act recipients' projects, as they are expected to invest more dollars in American semiconductor projects following renegotiations by the U.S. Commerce Department. Tom's Hardware, a renowned technology news source, provides updates on these developments.
