Donald Trump has been a critic of the CHIPS and Science Act, which aims to rejuvenate semiconductor manufacturing in the U.S. If the effort is curbed, Arizona may feel the pinch more than most states.
5 things to know about semiconductors and Arizona
Since the passage of the CHIPS and Science Act in 2022 Arizona has assumed a role of growing significance in the semiconductor industry.
Few states have benefitted more than Arizona from enactment of the CHIPS and Science Act, but the progress here in expanding this important industry could be slowed if president-elect Trump acts on his recent criticisms of the legislation.
The CHIPS Act has aimed to revive America’s role in making the intricate electrical components that power cellphones, computers, appliances, medical devices and much more.
Enacted in 2022, the legislation was a signature achievement of the Biden Administration, with president Biden visiting Arizona twice in recent years — to celebrate an expansion at Intel Corp. in Chandler and a massive new complex by Taiwan Semiconductor Manufacturing Co. in north Phoenix.
But Trump in late October criticized the legislation.
“That chip deal is so bad,” he said on Joe Rogan’s podcast. “We put up billions of dollars for rich companies to come in and borrow the money and build chip companies here.”
Rather than extend federal CHIPS Act funding to manufacturers, he instead proposed adding tariffs on imported semiconductors. He predicted that would encourage foreign producers to set up factories here to bypass those levies, drawing a parallel with the expansion of Japanese automobile plants in the United States.
TSMC commited to making its $65 billion Phoenix investment in 2020, after years of wooing by local economic-development officials and two years before the CHIPS Act passed Congress on a bipartisan vote driven mostly by Democrats. Similarly, Intel began its Chandler expansion prior to enactment of the legislation.
Neither TSMC nor Intel has received federal funds yet, and it’s possible they could be disbursed to the companies before Trump is inaugurated.
Too early to predict Trump’s impact on CHIPS Act spending with certainty
U.S. Sen. Mark Kelly and U.S. Rep. Greg Stanton, both Democrats, warned of Trump’s threat to the CHIPS Act and to semiconductor companies operating in the state.
At a news conference in late October, they warned of job losses and other detrimental impacts in the state if Trump guts the legislation. Kelly said that would “kneecap” the state’s economy, adding that Trump’s plan to add tariffs would drive up costs for many imported goods.
Others with stakes in Arizona or the CHIPS Act have mostly reacted with muted responses or haven’t reacted at all. For example, in a post-election statement, a TSMC spokesperson in Arizona said only that the company’s “investment plan in the U.S. remains unchanged.”
Similarly, an Intel spokesperson downplayed Trump’s recent rhetoric and noted that the CHIPS Act was rooted in proposals set forth by officials in his first administration.
“Restoring America’s semiconductor manufacturing leadership is integral to the country’s economic competitiveness and national security,” Intel said in a post-election statement. “As the only American company that designs and manufactures leading-edge chips, Intel has a critically important role to play, and we look forward to working with the Trump Administration on this shared priority.”
Chris Camacho, president and CEO of the Greater Phoenix Economic Council and one of the local officials who helped lure TSMC here, said he remains optimistic for continuing federal support, noting that the CHIPS Act received bipartisan support and emphasizing the importance of semiconductors to national security.
Some 40 semiconductor-related companies have located or expanded operations in Arizona since 2020, he said, with another two-dozen or so considering projects here.
Recent semiconductor achievements in Arizona
The stakes are especially high here, with Arizona companies in line for a disportionately high amount of federal grants and low-cost loans under the CHIPS Act, including $8.5 billion for Intel, $6.6 billion for TSMC, $400 million for Tempe-based Amkor Technology for a chip testing and packaging plant in Peoria and $162 million for Chandler-based Microchip Technology, for projects in other states.
Many suppliers also have come to Arizona, such as Taiwan’s Sunlit Flou & Chemical Co., which in October opened a chemical complex, its first such U.S. investment, near the TSMC complex in north Phoenix.
In addition, educational institutions including Arizona State University also are in line for funding under different programs of the CHIPS Act.
In addition to describing the CHIPS Act as bad, Trump accused Taiwan of “(stealing) our chip business.”
Still, there are reasons to think his new administration might not give up on the CHIPS Act entirely. For one thing, it coincides with many of Trump’s manufacturing-reshoring initiatives and has roots in proposals made during his first administration. In addition, several of the biggest investments announced so far are in red states or electoral-battleground states including Arizona, Ohio and Texas.
But the next Trump Administration could alter the size of grants or change other details such as funding milestones tied to job creation, workforce benefits, environmental practices or other policies at the recipient companies. At a minimum, the new president likely will put his imprint on the program.
Reach the writer at russ.wiles@arizonarepublic.com.
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Publish date : 2024-11-07 22:10:00
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