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Global Commodity Intelligence

Q2 2025 | APRIL - JUNE

CHIPS Act Uncertainty: Semiconductor Investment Landscape Shifts

The semiconductor industry faces a significant strategic shift following recent developments that challenge the future of the CHIPS and Science Act, the landmark U.S. federal initiative to strengthen domestic semiconductor production.

Proposed Repeal and Policy Shift

President Donald Trump recently called for the repeal of the $52.7 billion CHIPS Act, criticizing it as an unnecessary corporate subsidy. Notably, this bipartisan bill had previously received strong backing from both Democrats and Republicans in the U.S. Congress. The current administration's stance suggests a potential shift toward a market-driven investment approach, asserting that private-sector capital can achieve similar objectives without significant government intervention. This perspective has raised significant debate in Congress, leaving the Act—and consequently, U.S. semiconductor policy—in a state of uncertainty.

Restructuring of NIST and Industry Impact

Further complicating the situation, the National Institute of Standards and Technology (NIST), a critical agency responsible for implementing the CHIPS Act, faces extensive restructuring by the Department of Government Efficiency (DOGE). Approximately 500 positions within NIST, including technical specialists and key project managers involved in the semiconductor subsidy program, are set to be eliminated. Analysts caution that these cuts could severely hamper NIST’s ability to effectively administer CHIPS Act subsidies, potentially jeopardizing planned semiconductor initiatives and investments from prominent industry players such as Intel and Micron Technology. For instance, Intel recently delayed construction timelines for its massive chipmaking plant in Ohio, highlighting growing uncertainty around the future of federal subsidies. Although Intel remains committed to its U.S. expansion, such delays indicate a cautious approach, reflecting the industry's concerns about the stability of government-supported semiconductor investments.

TSMC's $100 Billion Market-Driven Investment

Simultaneously, Taiwan Semiconductor Manufacturing Company (TSMC) recently announced a monumental $100 billion investment to expand its semiconductor manufacturing facilities in the United States. Specifically, TSMC's investment will finance the construction of three additional wafer fabrication plants, two advanced chip packaging facilities, and a dedicated research and development center. This move can be interpreted as an alternative to government-subsidized initiatives, aligning closely with the current administration’s preference for market-driven industry growth. The magnitude of TSMC’s investment highlights substantial private-sector confidence, potentially setting a precedent for future corporate-led semiconductor manufacturing expansions within the U.S.

Strategic Implications for Taiwan

TSMC’s expansion has, however, prompted some concerns within Taiwanese government and industry circles. Despite being officially praised as a historic milestone in U.S.-Taiwan relations, there are underlying fears that transferring advanced manufacturing capabilities abroad might diminish Taiwan’s "silicon shield"—the strategic advantage derived from its central role in global semiconductor supply chains. Nevertheless, reports indicate that TSMC intends to retain its most advanced semiconductor nodes, including technologies at 2nm and beyond, within Taiwan. This approach highlights TSMC’s commitment to reinforcing Taiwan’s leadership in cutting-edge semiconductor technology.

Conclusion

Collectively, these developments reflect a pivotal moment for the global semiconductor industry. The potential dismantling of the CHIPS Act, coupled with significant corporate investments and shifting geopolitical dynamics, suggests a fundamental realignment in how semiconductor investments are approached. Companies and stakeholders are advised to closely monitor these policy changes and reassess their strategic positioning to adapt to an increasingly market-driven semiconductor investment landscape.