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U.S. Commerce Secretary Lutnick Renegotiates CHIPS Act Grants, Citing Overly Generous Terms
By Khadija Khan
June 5, 2025
Biden-Era Grants Face Scrutiny
In a bold move that underscores a major policy shift, U.S. Commerce Secretary Howard Lutnick announced this week that his department has successfully renegotiated several high-value CHIPS Act grants originally awarded under the Biden administration. These grant agreements, Lutnick said, were “overly generous” and did not always prioritize national security or long-term economic sustainability. “We’ve been able to renegotiate them,” he said, “and the only deals not getting done are deals that should have never been done in the first place.”
The CHIPS and Science Act, passed in 2022, allocated over $52 billion to support U.S. semiconductor production, research, and workforce development. However, a significant portion of those grants had not been fully executed before the end of the Biden administration. Under Lutnick’s oversight, the Department of Commerce has launched a review of previously approved grants, aiming to tighten conditions and redirect investments in line with what he describes as “hard-nosed strategic thinking.” (Reuters)
TSMC Becomes Flagship Example of Renegotiated Success
Among the highest-profile cases is that of Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker. Originally expected to invest up to $100 billion in Arizona, TSMC is now set to invest as much as $165 billion in multiple U.S. fabrication plants after entering into fresh negotiations with Commerce officials. TSMC executives cited “policy clarity and cost-sharing discipline” as factors in their decision to deepen their U.S. commitments.
President Donald Trump, who returned to the White House in January 2025, has taken a more aggressive stance toward foreign tech companies operating on U.S. soil. In April, he publicly stated that TSMC would face a 100% tax on chip imports if it did not accelerate its investment in U.S.-based manufacturing. TSMC’s compliance and enthusiasm to grow its presence stateside is now being hailed by Commerce as a blueprint for how future CHIPS Act deals should be structured.
Tariffs, Tech, and the Tug-of-War with China
While TSMC has agreed to expand, the semiconductor race is still closely tied to broader geopolitical tensions—especially with China. The Biden-era strategy had sought to balance competition with diplomacy, but Trump’s re-election has shifted the tone toward economic confrontation. U.S. tariffs on semiconductor imports, particularly from Asia, have added pressure to foreign chipmakers to localize production.
Secretary Lutnick acknowledged that tariffs are “not without impact,” but emphasized that the costs are acceptable given the need to secure American semiconductor independence. TSMC CEO C.C. Wei admitted last week that while tariffs have affected some areas of operations, demand for AI chips is “outpacing even the most aggressive forecasts.” This demand is now helping to justify the massive capital expenditures underway in the U.S.
Strengthening America’s Chip Sovereignty
Beyond TSMC, the Department of Commerce has entered renegotiations with other semiconductor giants including Intel, Samsung, and Micron. Lutnick noted that several proposed deals from 2023 and 2024 had terms too favorable to corporations, offering large subsidies without firm performance metrics or job guarantees. “That’s changing,” he said. “Every dollar now must produce measurable benefit for American workers, security, and supply chains.”
Lawmakers from both parties have expressed support for the recalibration. Senator J.D. Vance (R-OH) called the renegotiations “a long-overdue correction,” while Senator Mark Warner (D-VA) urged that the final results be “transparent and subject to oversight.” Analysts at Morgan Stanley estimate that renegotiated deals could save the U.S. government between $6 billion and $9 billion in the next 5 years, funds that could be redirected toward workforce training and innovation grants.
A New Era of Tech Nationalism
With global chip demand reaching record highs—especially for advanced semiconductors used in AI, autonomous vehicles, and next-gen smartphones—the U.S. is racing to secure its own supply chains. The Commerce Department’s renegotiation push signals a broader shift toward “tech nationalism,” where key industries are increasingly viewed through the lens of national security, not just economic productivity.
“This isn’t just about chips,” Lutnick said. “It’s about control of the future. Whoever leads in semiconductors leads in artificial intelligence, defense, and innovation. That has to be us.” This strategic pivot is already reshaping how foreign firms operate in the U.S., and how Washington manages public-private partnerships going forward. Whether these aggressive tactics will succeed in closing the semiconductor gap remains to be seen—but the direction is now unmistakably clear.