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Defense Speak Interpreted: Is There Still a CHIPS Act?

When I proposed my Defense Speak column topics for 2025 in February, there was a slight hint of doubt about the status of the CHIPS Act. But now?

The CHIPS and Science Act is a multi-part $280 billion authorization by the U.S. Congress that President Biden signed into law on Aug. 9, 2022. Notice, I did not say appropriation. That’s because the actual appropriation was $52.7 billion. Leading up to the congressional agreement, the "Creating Helpful Incentives to Produce Semiconductors" for America Act was discussed (hence the acronym), but that did not survive as the final bill’s short-form name. 

Basically, $39 million was appropriated to stimulate semiconductor manufacturing, and $13 billion was appropriated for R&D.

According to Wikipedia, “The “CHIPS Act” as appropriated, includes $39 billion in tax benefits, loan guarantees and grants, administered by the Department of Commerce to encourage American companies to build new chip manufacturing plants in the U.S. Additionally, $11 billion was appropriated to go toward advanced semiconductor research and development, separable into $8.5 billion of that total going to the National Institute for Standards and Technology, $500 million to Manufacturing USA, and $2 billion to a new public research hub called the National Semiconductor Technology Center. Under CHIPS, $24 billion would go to a new 25% advanced semiconductor manufacturing tax credit to encourage firms to stay in the United States, and $200 million would go to the National Science Foundation to resolve short-term labor supply issues.”¹

The confusion about whether there is still a CHIPS Act comes from the effort President Donald Trump has put forth to bend the initial intent of CHIPS. In my opinion, this is reflected toward the Trump effort to encourage public companies, including foreign ones, to build semiconductor capacity and capability here in the U.S., rather than use federal taxpayer money in the form of grants and loans.

In fact, Trump signed an executive order on March 31, implementing the U.S. Investment Accelerator to oversee the implementation of the CHIPS Act, but to keep that authority within the Department of Commerce. Since a flurry of publicity at the time of Accelerator release, there has been little public discussion.²

Here's what we know about the Investment Accelerator:

1. Michael Grimes, a seasoned finance professional with 30 years of experience at Morgan Stanley, has been appointed to head the newly established U.S. Investment Accelerator.³
2. To make the Accelerator permanent, a bill was introduced on April 29 in the Senate to codify the Accelerator. U.S. Sens Marsha Blackburn (R-Tenn), Ted Budd (R-NC), and Pete Ricketts (R-Neb) introduced the Investment Accelerator Act to “help facilitate and accelerate investments above $1 billion.”⁴

Some CHIPS-related activities have plowed ahead. For instance, the Department of Commerce created Natcast, “a purpose-built, nonprofit entity… to operate the National Semiconductor Technology Center.” There are 19 inaugural members of the NSTC Technical Advisory Board.⁵

Of course, some states are fighting against Trump’s possible repeal of the CHIPS Act. New York, for example, has a heavy semiconductor manufacturing base, and has at least five sites that are in line for CHIPS Act funding.   

Other projects around the United States associated with the pause in funding have been put on hold, whether directly or indirectly. For example, Intel broke ground in 2022 for a new fab northwest of Columbus, Ohio, even before any CHIPS proposals were submitted. While Intel did receive an award under the CHIPS Act, the company has been facing severe financial pressures. With top management changes and the Ohio fab construction on hold, Intel has said the earliest possible production start won’t be until 2030. It remains to be seen whether further CHIPS Act funding will be directed to the Ohio site.⁶

Also making news is the Taiwan Semiconductor Manufacturing Company (TSMC), which committed to invest in U.S. manufacturing by scheduling massive construction and start-ups in Arizona. TSMC started construction in 2020, and has continued to announce expansions, with a total possible capital expenditure of $165 billion by the end of the decade. This is far beyond the total CHIPS Act funding.⁷

Now, what does this all mean for defense budgets? While the CHIPS Act doesn’t specifically earmark disbursements for defense projects, there are line items in the Department of Defense’s FY2025 budget justification.

The Department of Defense has a role in administering some of the R&D funding, particularly through DARPA and other defense-related R&D programs. Key defense-focused program areas will be used to support the Microelectronics Commons, a DoD-led initiative to create a national network for onshore prototyping and lab-to-fab transition of semiconductor technologies.

The focus areas include:

• Secure edge computing/IoT
• 5G/6G technology
• Artificial intelligence hardware
• Quantum technology
• Electromagnetic warfare
• Commercial leap ahead technologies

In my opinion, though, the Commons is a wasted effort. Far too little money was appropriated to make the 31 designated Tech Hubs effective. Some contacts may prove fruitful, but it is hard for me to believe the Trump administration will have the patience to see this through.

The FY2025 budget has allocated $400 million specifically for defense-related activities and will be managed by the Office of the Under Secretary of Defense for Research and Engineering. The funds are used to support secure, domestic R&D, prototyping, and workforce development aligned with national security priorities.

So, is there any middle ground in the argument about the value of the CHIPS Act or whether it should continue? On May 13, a bipartisan bill—the Strengthening Essential Manufacturing and Industrial (SEMI) Investment Act—was filed in the U.S. Senate. It uses a provision from the CHIPS Act, but also uses a tax credit to stimulate the production of the materials for making semiconductors. At least this seems like a cross-aisle effort toward sanity.⁸

Can printed circuits be considered “materials” required by semiconductors? I don’t know, but I’ll look forward to what the politicians in D.C. come up with.

References

1. CHIPS and Science Act, Wikipedia.org.
2. “Trump signs order to set up new entity to take over Biden’s Chips Act program,” The Guardian, March 31, 2025.
3. “Michael Grimes to Lead U.S. Investment Accelerator, Supporting Trump’s Economic Agenda,” GuruFocus News, April 24, 2025.
4. “Blackburn, Budd, Ricketts Introduce Bill to Make President Trump’s United States Investment Accelerator Permanent,” Blackburn.senate.gov, April 29, 2025.
5. “Natcast Announces Inaugural NSTC Technical Advisory Board,” 3DInCities, May 1, 2025.
6. “IFTLE 625: If Intel Ohio is on Hold—Do They Still Get CHIPS Act Funds?” by Phil Garrou, 3DInCities, April 22, 2025.
7. “TSMC Can Create Up to 12,000 Jobs in US Through $165 Billion Announcement, Says President,” by Ramish Zafar, WCCFtech, May 7, 2025.
8. “SEMI Applauds New Bill to Clarify Tax Credit Eligibility for Critical Semiconductor Suppliers Under U.S. CHIPS Act,” I-Connect007, May 12, 2025.

Denny Fritz was a 20-year direct employee of MacDermid Inc., and retired after 12 years at SAIC, Inc., as a senior engineer supporting the Naval Surface Warfare Center in Crane, Indiana.