Michael Grimes, a former Morgan Stanley banker who helped Elon Musk finance his $44 billion Twitter takeover, is now leading the team that’s cutting down the CHIPS and Science Act office in the Department of Commerce. This news comes days after reports leaked that the White House is terminating 40% of the team driving the former administration’s key semiconductor strategy. According to the Financial Times, the new administration only intended to keep five probationary staff members under the office, although resistance from other personnel brought this figure to 22.
According to the Financial Times report, the external and government affairs team under the CHIPS Act office, alongside policy advisers in its strategy division have already been let go. This culling of the CHIPS Act staff members comes weeks after President Trump's administration started reviewing CHIPS Act awards with upcoming payments possibly delayed. Furthermore, the president said in his speech to the joint session of Congress that the subsidy is a “horrible, horrible thing,” asking the speaker of the House to “get rid of the CHIPS Act.”
The president has been rumored to oppose this policy even during his campaign, instead preferring tariffs to push chipmakers to build factories in America. The CHIPS Act is largely disbursed, so we don’t expect any more companies to receive awards through the CHIPS Act. How Washington will disburse the billions of dollars that were already awarded to various companies but haven’t been released yet will ultimately become the work of the remaining 14%. After all, the president also said, “Whatever is left over, Mr. Speaker, you should use it to reduce debt or any other reason you want to.” Fortunately, the staff in charge of payouts seems to be still in place, so there’s still a chance that contracts that have already been signed will still be honored.
The tariffs President Trump has placed on China, one of the biggest sources of electronic goods for the U.S., are seemingly forcing companies to move their manufacturing bases outside of the country. TSMC has just announced an extra $100 billion investment in the country; this is on top of the $65 billion that it has already spent on putting up its Arizona fab. Aside from that, the president said that Apple is spending $500 billion to build up a manufacturing plant in the U.S., with OpenAI and Oracle also spending the same amount for AI data servers.
However, it will take several years for these investments and their associated supply chains to come online. That means the average consumer will have to deal with the increased prices brought about by tariffs in the meantime.
