Trump Slammed Biden's $52 Billion CHIPS Act. Then He Used It To Buy a Federal Stake in Intel.
Biden said "companies are investing in America again." Instead, America is investing in companies—and getting little in return.
In March, President Donald Trump blasted the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act of 2022. He called it "a horrible, horrible thing." Passed under President Joe Biden, the CHIPS Act was essentially a $52 billion industrial policy slush fund intended primarily to bolster domestic production of computer chips.
When the law passed in 2022, the Biden administration said it was a "smart investment" that would "strengthen American manufacturing, supply chains, and national security, and invest in research and development, science and technology" while bringing thousands of "good-paying manufacturing jobs back home."
There was never much reason to believe in the previous administration's industrial policy boosterism. Early grants largely went either to factories that were already in development and would have been built anyway or to facilities of questionable economic value that might not be completed even with the additional taxpayer funding.
So Trump was on solid ground when he told Congress, "You should get rid of the CHIPS Act, and whatever's left over…you should use it to reduce debt, or any other reason you want to." Yet in the months since, Trump has made use of CHIPS funding not to reduce the debt, but to pursue his own questionable industrial policy. His version is even less accountable and may well be even worse for taxpayers.
Among the recipients of CHIPS funding was computer chipmaker Intel, which was set to receive $11 billion to help fund the construction of semiconductor fabs in several states. By late summer, the company said it had already received more than $5 billion of the funds. But Intel struggled to fulfill those commitments, falling behind on factory construction in some places and laying off workers as it suffered from ongoing financial and managerial problems. By the middle of 2025, Intel looked very much like a failing business.
In theory, the CHIPS Act provided a mechanism for the federal government to retract the grant and get all or part of its money back should Intel fail to meet its obligations. It's not clear whether the federal government would have exercised its option to take the money back, but it was an option—until Trump stepped in.
As the company flailed, Trump met with its CEO, Lip-Bu Tan. Trump first called for him to resign. Then in August, the Trump administration announced that the federal government would just take partial ownership of Intel. Essentially, the U.S. government would purchase a roughly 10 percent stake in the chipmaker, partially nationalizing the company. And funds from CHIPS would be used to do it.
Trump bragged about the deal, saying he planned to "do more of them." The company's stock price rose on the news, suggesting that investors liked it. But that's probably because it was a good deal for the company, at taxpayer expense.
According to public financial filings, the federal government would disburse the remaining funds, about $6 billion, while clearing any obligations for the company to actually complete work on new domestic semiconductor fabs.
In exchange, the federal government would gain partial ownership—as well as all the financial risks stockholders usually have when they invest in companies. Those risks will now be borne by taxpayers. As Carnegie Endowment fellow Peter Harrell pointed out in a social media post, the move came with "a lot of downside risk."
Fundamentally, Trump gave Intel a federal bailout, removing the company's public obligations and accountability while loading more financial risk onto the public.
When the CHIPS Act passed in 2022, the Biden administration celebrated by declaring that "companies are investing in America again." Under both Biden and Trump, the opposite turned out to be true: America was investing in companies—and getting little in return. Trump was right when he said CHIPS was a "horrible, horrible thing." But his dealmaker's twist on semiconductor subsidies didn't make it any better.
This article originally appeared in print under the headline "Chipping Away at CHIPS."
