Semiconductor gains in Arizona could be slowed by Trump's election victory.

Donald Trump has been a critic of the CHIPS and Science Act, which aims to rejuvenate semiconductor manufacturing in the US. If efforts are curtailed, Arizona may feel the pressure more than most states.

Few states have benefited more than Arizona from the passage of the CHIPS and Science Act, but progress here in expanding this important industry could be slowed if President-elect Trump follows up on his recent criticism of the legislation.

The CHIPS Act aims to revive America’s role in making the complicated electrical components that power cellphones, computers, appliances, medical devices and more.

The legislation, which took effect in 2022, 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 huge new complex of Taiwan Semiconductor Manufacturing Co. in north Phoenix.

But Trump criticized the legislation in late October.

“That chip deal is so bad,” he said on Joe Rogan’s podcast. “We made billions of dollars available so that wealthy companies could come in and borrow the money to build chip companies here.”

Rather than extend federal CHIPS Act funding to manufacturers, he instead proposed adding tariffs on imported semiconductors. He predicted that this would encourage foreign manufacturers to set up factories here to avoid those tariffs, drawing a parallel with the expansion of Japanese car plants in the United States.

TSMC then committed to making its $65 billion investment in Phoenix in 2020 years of pursuit by local economic development officials and two years before the CHIPS Act passed Congress on a bipartisan vote driven primarily by Democrats. Similarly, Intel began expanding Chandler before the legislation went into effect.

Neither TSMC nor Intel have received federal funds yet, and it’s possible they could be paid out to the companies before Trump is inaugurated.

It is too early to predict with certainty Trump’s impact on CHIPS Act spending

U.S. Senator Mark Kelly and U.S. Representative Greg Stanton, both Democrats, warned of Trump’s threat against the CHIPS Act and semiconductor companies operating in the state.

said at a press conference in late October they warned of job losses and other damaging consequences for the state if Trump were to undermine the legislation. Kelly said this would “squeeze” the state’s economy, adding that Trump’s plan to impose tariffs would drive up costs on many imported goods.

Others with interests in Arizona or the CHIPS Act have responded mostly with muted responses or not at all. For example, in a statement after the election, a spokesperson for TSMC 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, noting that the CHIPS Act was rooted in proposals from officials in his first administration.

“Restoring U.S. leadership in semiconductor manufacturing is integral to the nation’s economic competitiveness and national security,” Intel said in a statement after the election. “As the only American company designing and manufacturing advanced chips, Intel has a critical 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 about continued federal aid, noting that the CHIPS Act received bipartisan support and emphasized the importance of semiconductors to national security. .

About 40 semiconductor companies have established or expanded operations in Arizona since 2020, he said, with another 20 or so companies considering projects here.

Recent Semiconductor Performance in Arizona

The stakes here are especially high, with Arizona companies eligible for a disproportionate 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 have also come to Arizona, such as Taiwan’s Sunlit Flou & Chemical Co., which opened in October opened a chemical complex, the first such U.S. investment, near the TSMC complex in north Phoenix.

In addition, so are educational institutions, including Arizona State University eligible for funding under various CHIPS Act programs.

In addition to describing the CHIPS Act as bad, Trump also accused Taiwan of “(stealing) our chip business.”

Still, there are reasons to believe that his new administration may not abandon the CHIPS law altogether. First, it coincides with many of Trump’s manufacturing reshoring initiatives and has roots in proposals made during his first administration. Additionally, some of the largest investments announced to date are in red states or electoral battleground states, including Arizona, Ohio and Texas.

But the next Trump administration could change the size of the grants or change other details, such as funding milestones related to job creation, labor benefits, environmental practices or other policies at recipient companies. At the very least, the new president will likely put his stamp on the program.

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