The Republican presidential ticket is taking square aim at one of Democratic President Joe Biden’s signature achievements, a federal program that has allocated billions of dollars to boost semiconductor manufacturing projects in Arizona and other states.
But former President Donald Trump and Sen. JD Vance have sent different signals when discussing what they think is wrong with the Creating Helpful Incentives to Produce Semiconductors and Science, or CHIPS Act, which has provided over $15 billion in grants to businesses that have a footprint in Arizona.
That includes TSMC, the Taiwanese company that first announced plans to build a chip factory in Phoenix during Trump’s presidency in 2020, two years before Biden signed the CHIPS Act into law.
TSMC was allocated $6.6 billion in grants and $5 billion in loans from the CHIPS Act, according to the Semiconductor Industry Association, and has since announced an expanded vision for its Phoenix campus, which will eventually feature three factories.
But Cronkite News reported that a second Trump presidency could put that federal funding at risk after the former President criticized the decision to award billions of dollars to TSMC and alleged Taiwan “took our chip business.”
And during a campaign rally in Peoria on Oct. 22, Vance also criticized the implementation of the CHIPS Act, though he did not target a specific recipient like TSMC. Instead, Vance accused the Biden Administration — and Vice President Kamala Harris, the Democratic presidential nominee — of politicizing the program.
“What you've seen under [Commerce Secretary Gina Raimondo] and Kamala Harris is them trying to say that you're only going to get money to manufacture chips if you do what we want you to do politically,” Vance said. “And I think that's not a way to run an economy in this country.”
But Vance did not provide evidence that the roughly $30 billion in grants were provided only to businesses aligned politically with Biden or Harris.
And Sujai Shivakumar, with the bipartisan Center for Strategic and International Studies, said there is no evidence to support those claims.
“We’re looking very closely in terms of how the Chips Act Office is making decisions, how they're allocating and so forth,” Shivakumar, director of the CSIS Renewing American Innovation program. “And, really, we don't have any basis to believe that there's anything political about what these allocations are.”
Shivakumar said there are a limited number of businesses capable of doing the work incentivized by the CHIPS Act as it is and there are procedures in place to ensure that money is used effectively. He also noted the money allocated by the CHIPS Program Office has been spread around to both red and blue states.
According to the Semiconductor Industry Association, the federal government has announced $33.7 billion in grant awards and up to $28.8 billion in loans to 20 companies across 32 projects in 20 states, including Arizona, Texas, Oregon and New York.
“The CHIPS office is basically apolitical,” Shivakumar said. “It's a fairly professional outfit and they were fairly strategically focused in terms of maximizing the impact of the CHIPS funds.”
He added, “Part of the reason why it takes so long [to distribute funds] is to make sure that everything is done without the politics involved in it. There's a lot of procedure in place to make sure that, in fact, what is being alleged doesn't take place.”
Neither Trump nor Vance has explicitly threatened to claw back CHIPS Act allocations, though Kari Lake, a Trump ally running for U.S. Senate in Arizona, said she would like to see changes to the program.
Lake said she would support legislation to put safeguards in place to claw back money from companies that institute mass layoffs after receiving federal subsidies. She pointed to Intel, which was awarded $8.5 billion in grants in April and announced a mass layoff in August.
“The whole point to helping an industry is also to help make sure we're protecting the workers as well,” Lake said.
But Shivakumar said there are risks in going back to the drawing board, saying any delay risks putting the U.S. behind the eight ball in the fast moving chip industry.
“Because the pace of competition, especially vis-à-vis China, is very fast,” he said. “So you can't wait for two years, because then your window of opportunity, your opportunity to make the gains in terms of manufacturing, in terms of the research and you know being at the leading edge of the chip race is lost.”
Vance did lay out a different type of plan to encourage chip manufacturers to build up their U.S. operations.
“Let's lower energy costs, and let's encourage businesses to produce as many chips in America as possible,” Vance said. “That's option A — that is what Trump thinks that we should be doing, encouraging more manufacturing.”
But the Democratic governor in Arizona — where TSMC, Intel and Amkor have all received CHIPS Act allocation — said the current system is working just fine.
“What you're seeing is a testament to the impact that the Chips and Science Act is having on American manufacturing and advanced manufacturing, especially here in Arizona, it's creating jobs. It's contributing to our booming economy,” Hobbs said after attending the grand opening of a new facility opened in Phoenix by Sunlit, a Taiwan-based semiconductor chemical supplier.
“And the fact is that under a different administration, the Chips and Science Act wouldn't have been signed into law,” Hobbs said.
The one thing both Republicans and Democrats agree on is the importance of building up the country’s chip manufacturing capacity due to the national security implications of relying on other chip makers in other countries, namely China.
“Which computer chips are in everything, right?” Vance said. “They're not just in our phones. They're in our cars, they're in our laptops, they're in our refrigerators. We have got to make more of this stuff in the United States of America, and we're thrilled about the expansion of operations in Arizona.”
Shivakumar, with the Center for Strategic and International Studies, attributed the current fight over the CHIPS Act to politics, not policy.
“I think you know, these kinds of allegations perhaps are par for the course during an election cycle, but really the issue of chips is really a national security issue,” he said. “And you know, it's unfortunate that it's sort of being played for politics.”
EDITOR'S NOTE: The story has been updated to correct the date of the campaign rally in Peoria and to correct the amount of grant money that has gone to businesses that operate in Arizona.