Did President Biden Just Save the CHIPS Act From Trump?
The president just secured a $6.6 billion deal to build factories in Arizona—setting up a showdown when Trump, who is vehemently opposed to the key pillar of Biden’s economic program, takes office.
President Biden may have secured a government program that funds semiconductor manufacturing in the United States, critical for electronics companies.
The Biden administration announced Friday that a $6.6 billion deal with the Taiwan Semiconductor Manufacturing Company to build three fabrication plants near Phoenix had been finalized, creating thousands of jobs in Arizona. Semiconductors are used in nearly every electronic device, including cell phones, airplanes, and cars.
“This is a gigantic announcement,” Secretary of Commerce Gina Raimondo told reporters Friday. “This will be one of the most important investments that we make as a country to advance our economic and national security.”
The deal was initially announced in April, with $6.6 billion in grants promised to the Taiwanese company along with $5 billion in loans. The funding comes from the CHIPS and Science Act, signed into law by Biden in 2022, which allots $52.7 billion for chip research, manufacturing, and workforce development. TSMC makes chips for leading tech companies such as Apple, NVIDIA, and AMDl.
President-elect Donald Trump has attacked the bill, claiming in April that the United States shouldn’t be “giving [Taiwan] billions of dollars to build chips.” Trump’s stance led to House Speaker Mike Johnson, who voted against the CHIPS Act, saying days before the 2024 election that he would try to repeal the bill if Trump was elected.
Later, Johnson was forced to backtrack after his fellow Republican Representative Brandon Williams pointed out that a new $100 billion chip-making factory was going to be built in Williams’s central New York district thanks to the bill.
The Arizona deal is the biggest such foreign investment in U.S. history, according to the White House, and its finalization means that the government is obligated to follow through with its funding promises to TSMC, making it very hard, if not virtually impossible, for Trump to scuttle the CHIPS Act.
“It’s a binding contract,” said Ryan Harper, the White House CHIPS implementation coordinator. “The company, as long as it meets its milestones, has a contractual binding agreement from the government to move forward.”
In his first term as president, Trump backed then–Wisconsin Governor Scott Walker’s effort to bring Taiwanese manufacturing company Foxconn to the Badger State, with the Republican Walker offering the company $3 billion in subsidies in exchange for the promise of 10,000 new jobs and a $10 billion investment in the state.
But the bill didn’t deliver the promised jobs, with government subsidies ballooning to over $4.5 billion, Foxconn reducing the size of the planned factory by half, and robots doing most of the work. Walker ultimately was voted out of office because of the deal, which his Democratic successor, Tony Evers, was forced to rework. Today, the factory that was actually built only employs 1,000 people, and Wisconsin now has its hopes on the CHIPS Act’s funding for something new.
Biden’s completed Arizona deal likely means that he can leave office with the CHIPS Act as one of his signature achievements, a small silver lining in the face of Trump’s election victory. He can also point to the fact that, should everything in the contract unfold as planned, he succeeded where Trump and Republicans previously failed.