Lutnick Pledges Chips Act Review, Demurs on Honoring Contracts

(Bloomberg) — President Donald Trump’s pick to lead the agency in charge of a $52 billion semiconductor subsidy program declined to give it unqualified support, raising questions about the disbursement of funds to companies like Intel Corp. and Taiwan Semiconductor Manufacturing Co.

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“I can’t say that I can honor something I haven’t read,” Howard Lutnick, Trump’s nominee for commerce secretary, said of the binding Chips Act awards in a confirmation hearing Wednesday. “To the extent monies have been disbursed, I would commit to rigorously enforcing documents that have been signed by those companies to make sure we get the benefit of the bargain.”

Still, Lutnick signaled a commitment to the program overall. He told senators that the Chips Act is an “excellent down payment” and repeatedly emphasized the importance of revitalizing American semiconductor manufacturing.

All told, his remarks indicate that the Trump administration will seek to put its own stamp on the initiative, but not unravel it entirely. That could include attempts to remove environmental requirements or labor-friendly provisions, as some Republican lawmakers have already signaled an interest in doing.

Shares of Intel fell less than 1% as of 2:17 p.m. in New York after trading up for most of the session. Micron Technology Inc., another Chips Act beneficiary, also slipped less than 1%.

The Chips Act set aside $39 billion in grants for manufacturing projects — plus loans and tax breaks — to boost American chipmaking after decades of production shifting to Asia. The program is one of the largest pieces of US industrial policy in more than a generation and was a major achievement of President Joe Biden’s administration.

Companies pledged to invest more than $400 billion in response, including major new projects from Micron, Samsung Electronics Co. and GlobalFoundries Inc. Those chipmakers are among the 20 companies that signed final contracts with the Biden administration — documents that industry and government officials generally viewed to be ironclad.

But throughout negotiations, some companies worried that the language of their contracts gives Trump officials some room to make changes, Bloomberg has reported. So far, just $4.3 billion in manufacturing incentives has actually gone out the door. That’s because companies will only receive money when they hit key construction and production benchmarks.

“As a structure, I think we need to get it right,” Lutnick said Wednesday when asked about the awards. “I think we need to review them and get it right. But as the way the Congress has set it, it’s an excellent down payment in our ability to bring semiconductor manufacturing back to America.”

Lutnick also told his Biden administration predecessor, Gina Raimondo, that he’s committed to the program, Bloomberg has reported. But Trump himself has criticized the law and said he would prefer tariffs as the tactic for luring chipmakers to American soil.

Trump’s proposed federal funding freeze was slated to pause Chips Act implementation work until a federal judge temporarily blocked the directive late Tuesday. The White House has since rescinded the order.

Asked by senators about the impact of that proposed freeze, Lutnick said it “lets me have the time to, A, be confirmed and, B, dig in and study all of the documents that we’ve done so I can help get it out the door and get it done.”

He also dismissed concerns about the proposed funding freeze causing delays for the Chips Act initiative. The program “has not really distributed much money, so the timing is not really impacted,” he said, adding that he is committed to “deliver efficiently and effectively the outcomes that you anticipated — or better.”