DOGE Hubris: The CHIPS and Science Act was signed into law by President Joe Biden in August 2022, providing hundreds of billions of dollars to boost the domestic semiconductor industry in the US. The bipartisan bill combined two separate drafts: the Endless Frontier Act and the CHIPS for America Act. However, it is now essentially dead because there will be no federal employees left to manage the plan.
Tech consulting firm Semiconductor Advisors, citing unnamed sources, recent news coverage, and previous statements from members of the Trump administration, predicts the imminent demise of the CHIPS and Science Act funding initiative. According to SA, the act will never achieve its ambitious goals due to the mass firing of federal employees enacted by the new US administration and Elon Musk's DOGE organization.
CHIPS Act funding projects are managed by employees hired last year by the National Institute of Standards and Technology (NIST). However, the administration now plans to fire around 500 NIST employees due to their "probationary" status, SA reports, effectively dismantling the core workforce responsible for overseeing the initiative. Without these personnel, there will be no one left to certify that companies have met the act's requirements to receive allocated funds.
SA also accuses the administration of "usurping Congress by mass firings." The firm references recent reports on Trump's plan to dismiss probationary staffers at NIST, stating that internal sources at the agency expect to lose their jobs imminently. The job cuts will also affect the US AI Safety Institute, which was working on enforcing new safety regulations for upcoming AI models.
NIST is preparing to lay off 497 employees, sources report. The affected professionals include 74 postdoctoral researchers, 57 percent of staff working on CHIPS Act incentives, and 67 percent of research and development personnel. The agency itself faces an uncertain future, as President Trump has yet to appoint a new leader to guide the organization.
Trump's primary focus is on enforcing tariffs to promote domestic semiconductor manufacturing, with a new 25 percent levy on imported semiconductor products expected soon. However, SA argues that this approach is deeply flawed. "We don't think that the administration has fully thought through all the ramifications as 100 percent of AI chips are imported from Taiwan," SA said.
Furthermore, a growing share of Intel-designed chips are being manufactured by Taiwan's TSMC and other foreign foundries, while 100 perceent of AMD chips and the vast majority of memory chips also come from overseas. Overall, more than 80 percent of chips sold in the US are foreign-made.
According to SA, this is not a bluff or a negotiating tactic, but rather a complete shift in strategy by the new administration. Chipmakers that had planned to fund their US operations through CHIPS Act incentives are now likely to abandon their plans, leading to an industry-wide slowdown in 2025.
Semiconductor industry braces for CHIPS Act fallout after federal job cuts
