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Since the passage of the CHIPS and Science Act of 2022, the federal government has committed hundreds of millions of dollars to research and produce emerging technologies in Indiana to strengthen national security and expand American innovation.
However, statements by President-elect Donald Trump and House Speaker Mike Johnson (R-Louisiana) just before the Nov. 5 election prompted the new Republican president and Republican-controlled Congress to fully approve the bill. Questions have arisen as to whether this will be done and whether there will be any changes. It might come.
“That tip deal was so bad,” President Trump said on the “Joe Rogan Experience” podcast last month.
Experts and observers say Republican leaders are unlikely to repeal the law or the money already allocated. But future U.S. strategies to encourage domestic manufacturing of semiconductors could be as much about raising tariffs as spending money, they say.
“I think (President-elect Trump) has made a point that this is going to be a common sense administration,” said Sen. Todd Young, a Republican from Indiana and author of the CHIPS Act. “And this is an area where common sense is very much needed.”
Mr. Young called for additional federal spending aimed at reducing U.S. dependence on technology from China and other foreign countries and increasing domestic research, development and manufacturing of semiconductors and other key technology components. He was one of the earliest advocates.
The resulting legislation, the Creating Incentives to Help Semiconductor Production (CHIPS) and Science Act, allocated $53 billion in federal incentives for U.S.-based semiconductor manufacturing and research and development. This includes $39 billion to the CHIPS for America Fund, administered by the U.S. Department of Commerce, to build new semiconductor facilities and expand existing semiconductor facilities. This law allows semiconductor companies to receive a 25% tax credit.
The United States and foreign companies with facilities in the United States are eligible for federal incentives.
The CHIPS Act represents a major investment in Indiana.
South Korean chipmaker SK Hynix will receive up to $450 million in federal CHIPS Act assistance to build a $3.87 billion semiconductor packaging facility at Purdue Research Park in West Lafayette.
Additionally, two federal technology coalitions that overlap in the state, the Silicon Crossroads Microelectronics Commons Hub and the Heartland BioWorks Hub, have received significant funding. Silicon Crossroads was one of eight companies named, with initial funding of $33 million, and Heartland BioWorks was one of 12, receiving $51 million.
President Trump complained that the law would “cost wealthy corporations billions of dollars.” And just before the election, House Speaker Johnson said Republicans would “probably try to repeal” the bill to boost U.S. semiconductor chip production, but quickly spoke out, saying he wanted to “streamline” the bill instead. was withdrawn.
Since then, watchdogs have been trying to determine what this means for the law, especially since Republicans are expected to take control of the Senate in January.
Young did not respond to IBJ’s questions on election night about whether the CHIPS Act would survive, but his office issued a statement.
“If there are regulations that can be streamlined to help create more jobs from the growing semiconductor industry in Indiana and across the country, please join me,” the statement said. “But I am confident that the CHIPS Act will survive.”
Senate Minority Leader Chuck Schumer, who is the bill’s lead sponsor and worked with Mr. Young to develop the final version, is also confident.
“I believe that the CHIPS Act is here to stay because it has always been bipartisan,” Schumer told reporters at an event in New York, according to multiple publications that were present.
The bill passed in the Senate on a bipartisan vote, including support from Minority Leader Mitch McConnell, and in the House, 24 Republicans joined the Democratic majority.
no comment
Some stakeholders in Indiana were reluctant to talk about the future of the CHIPS Act hypothetically. The Indiana Chamber of Commerce, which supported the bill’s passage, and Purdue University, a key stakeholder and operating partner of SK Hynix, declined to comment for that reason.
The Naval Surface Warfare Center Crane Division, which is involved in CHIPS Act activities, referred IBJ’s request for comment to the Department of Defense. Several semiconductor companies did not respond to requests for comment.
The Indiana Economic Development Corporation referred the bank’s request to the incoming governor’s administration. Governor-elect Mike Brown’s transition team did not comment on the CHIPS Act and directed the IB to hold a transition press conference on November 6th, which did not mention the CHIPS Act or semiconductors.
Indiana’s newly elected officials did not respond to requests for comment on questions about CHIPS.
But other observers say President Trump and a Republican Congress are unlikely to scale back investment in CHIPS.
Citing the activity the CHIPS Act has already generated, Roger Lee, research director at Columbus, Ind.-based investment advisory firm Kiel, Merbach & Co., said the spending “is going to happen whether we like it or not. “We are working on behalf of President Trump.” He would be insane to kill anything that moves. ”
Lee said the CHIPS Act and the domestic manufacturing activity it encourages also fits into President Trump’s “America First” outlook, especially when it comes to economic competition with China.
Still, the microelectronics industry is on high alert for any policy changes, good or bad, said Bob Patti, founder and leader of Chicago-based Nanced Semiconductors. The company is building a manufacturing facility at Westgate@Crane Technology Park in southern Indiana.
Patty said the change in direction in the CHIPS Act would come as a surprise, but companies like his are waiting to see if they need to revise their long-term plans.
He says that while the typical voter may be able to dismiss campaign promises, companies, especially those in microelectronics, need to consider these assumptions when planning for the years ahead.
different approach
Officials say they expect Trump to focus on tariffs to boost domestic production of microelectronics and other high-tech products and deter imports.
President Trump said on the Rogan Podcast before the election how he would deal with foreign domination in microelectronics: “Just put tariffs on it.”
Tariffs are essentially a form of import tax that must be paid by domestic businesses that purchase foreign products. Many experts agree that the additional costs will be passed on to consumers.
Patty said President Trump’s promise to raise tariffs on foreign goods is making businesses nervous. The microelectronics industry is so widespread that it is unusual for all components to be assembled in one country. He said a comprehensive tariff policy without cuts would be a “shock to the system.”
“Business models are based on the status quo, so companies want the predictability of ‘what is’,” he said. “If you’re not sure about the impact of something, you tend to just stand back and try to slow things down to see how the policy change affects your market segment.”
Patti said if the CHIPS Act is scaled back or changed, the industry will likely delay some projects underway. In the worst case scenario, several companies will abandon their plans, he said.
“In many ways, this could undermine the onshoring efforts that have been made,” Patti said.
Two hubs funded by Indiana’s CHIPS Act are likely to lose momentum as well. The Technology Hub is a collection of members from the private sector, academia, and government working together to grow innovation and domestic manufacturing in microelectronics and life sciences. States and hub organizers are looking to expand local investment with a focus on current and future members.
Patty said stripping away the CHIPS Act would eliminate Indiana’s federal technology hub because it’s not yet sustainable. He said it would be difficult to convince companies to invest domestically as the industry is highly capital-intensive and seeks to offset costs through incentives.
The Bloomington-based Applied Research Institute, which works with IEDC to guide the state’s economic direction and lead the hub, did not comment directly on the impact of President Trump’s cuts to the CHIPS program.
“ARI will work with the incoming administration and Congress to advance our national security, create good-wage jobs here in the United States, and achieve our strategic goals of maximizing taxpayer return on federal investments in emerging technologies. I look forward to making sure we achieve this.” Andrew Cossack, ARI’s executive vice president of partnerships and general counsel, said in a statement.
indiana leans
With the industry experiencing rapid growth, the CHIPS Act gave the microelectronics industry an economic reason to consider expanding its operations in the United States. The law’s increased funding also brings the U.S. somewhat up to speed, Paty said, as other countries have already put similar incentive mechanisms in place.
“This is a huge amount of marbles,” he said.
As of August, the CHIPS Act had already spurred nearly $450 billion in private investment in 28 states, according to the Semiconductor Industry Association. The investment includes 90 projects announced across the country, which will create a total of 58,000 jobs. These projects include building semiconductor manufacturing facilities known as fabs, expanding existing fabs, and adding facilities to supply materials and equipment for chip manufacturing.
Since 2022, Indiana has attracted at least eight semiconductor companies, including SK Hynix in West Lafayette and Everspin Technologies in Westgate@Crane Technology Park.
“CHIPS and the Science Act have increased the importance of U.S.-based manufacturing. It is essential to do so.” “We will continue to work with Crane leadership, state officials, and the new administration to advocate for the growth of our technology park, our partners, and the regional defense community.”
Microelectronics is projected to become a $1 trillion global industry by 2030, according to New York-based management consulting firm McKinsey & Company. Purdue University and Ivy Tech Community College are launching programs and building clean rooms to prepare students to enter the industry. IEDC is in the process of signing deals with semiconductor companies to establish operations at a large tech park in Boone County. States, ARIs, and companies spent hundreds to thousands of hours negotiating with companies and preparing applications for federal funding.
But for now, Patty said, it’s business as usual. He said the tariff changes could go into effect as early as January, at which time the country would learn whether repealing the CHIPS Act would be a priority for the president.
“I was nervous,” he said. “I don’t know how else to explain it.”
IBJ’s Susan Orr contributed to this article.
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