Back to the drawing board for big U.S. CHIPS investments?

With President Trump’s March 31 signature on an executive order to create a United States Investment Accelerator within the Department of Commerce aimed to help expedite development of foreign and domestic manufacturing investments priced at over $1 Billion, there is concern about what impact one sentence has on the existing $52 Billion in CHIPs related deals across the country. Some of the projects have been on ice since the change of Administration. 

The sentence in question is: “The Investment Accelerator shall be responsible for the CHIPS Program Office within the Department of Commerce, which shall focus on delivering the benefit of the bargain for taxpayers by negotiating much better deals than those of the previous administration.” [Emphasis added.]

Since there is no new money in known discussion for refueling the CHIPS Act coffers, will the terms of awards made since the CHIPS Act was passed by Congress in 2022 be subject to renegotiation? Just as existing R&D grants, transportation contracts, and other federal spending awards have become subject to rescinding or cancellation for unrelated changes in policy differences between the two presidential administrations, some in the semiconductor and technology industries are nervous about the implications of the new executive order—simultaneously welcoming potential relief from regulatory burden and expensive siting considerations also mentioned to be priorities for the new Investment Accelerator.

Also noted was that while many recently discussed tariffs have been intended to build or boost domestic automotive manufacturing, both domestic and foreign projects are to be assisted by the incoming Investment Accelerator, consistent with the intent and delivery on the original CHIPS Act.

Bloomberg reporters Mackenzie Hawkins and Ian King report it is Commerce Secretary Howard Lutnick’s intent to push companies receiving loans and grants from the CHIPS Act to make larger commitments than previously promised and accepted in the terms of the existing agreements. The March 31 article points out $33.7 billion of CHIPS direct funds already have contracts signed by both parties. 

Renegotiation, if in the offing for existing contracts, will further delay many of the billion-dollar-plus projects intended to be accelerated, some CHIPs watchers fear. Several states and communities offered sizable—and in some states unprecedented—incentive packages and related commitments to lure chip plants to locate within their boundaries. Micron’s commitment to New York, for instance, has kick-started state, university and regional investment in numerous regional workforce training, infrastructure improvement, R&D investments, and related economic development projects. New water treatment plants, electric grid improvements and large speculative rural land grabs for expected residential and commercial development surrounding the proposed greenfield Intel operations in central Ohio are all well underway. 

The massive Intel project in Ohio is already on unsettled ground given the company’s sagging market performance and leadership changes, according to many news sources.

SSTI will be monitoring any clarifications and new develops that may be forthcoming related to the new U.S. Innovation Accelerator and any potential implications for state and regional innovation and tech-based economic development strategies. 

The new office is to be in place by April 30 according to the March 31 executive order.