[Text/Observer Network Wang Yi] To guard against Trump reneging on the subsidies promised in the CHIPS Act, former President Biden rushed to distribute chip subsidies to a batch of companies before leaving office, but it seems that he still failed to prevent it.

According to reports by Britain's Reuters and the U.S.'s Bloomberg, U.S. Commerce Secretary Raimondo stated on June 4 at a hearing of the Senate Appropriations Committee that the Trump administration is negotiating with the Biden administration regarding the grants provided to semiconductor manufacturers under the 2022 Chips and Science Act to ensure a "better deal" and attract more companies to invest in the U.S.

"Are we renegotiating? Of course, it's for the benefit of American taxpayers," Raimondo said, adding that some of the Biden administration's grants "seem overly generous," and they are currently renegotiating this matter.

Raimondo indicated that all deals are progressing positively, and the only deal that has not been reached is one that should not have been made in the first place. Reuters believes that this seems to suggest that the Trump administration canceled some subsidies.

"We are getting more value for the same amount of money," Raimondo pointed out, giving TSMC as an example of a successful renegotiation. This company received $6 billion in subsidies under the Chips Act, "we could have adjusted the grant amount," but TSMC has already increased its investment in the U.S. by $10 billion on top of the initial commitment of $65 billion, and the U.S. government has not provided any additional funds.

On June 4 local time, Raimondo spoke at a hearing of the Senate Appropriations Committee. Video screenshot.

Reuters reported that it is unclear whether TSMC's additional investment falls within the scope of the Chips Act renegotiation, but it was reported that the White House had sought to renegotiate chip subsidies as early as February, suggesting the cancellation of some grants. Bloomberg believes that Raimondo is using the suspension of the Chips Act grants as a threat to urge companies to follow TSMC's lead and expand their investments in U.S. semiconductors.

South Korean Yonhap News reported on June 5 that Raimondo's remarks caused concern among South Korean tech companies. Samsung Electronics applied for $4.745 billion in funding through the Chips Act to support the construction of its chip manufacturing plant in Texas. Another South Korean semiconductor company SK Hynix also received $458 million in direct subsidies and $500 million in loans from the bill to build a wafer factory in Indiana.

The Chips Act was signed into law in August 2022 by Biden and is central to his economic policy, providing $280 billion to support the U.S. semiconductor industry. Among these, $52.7 billion is used to provide financial support to the semiconductor industry, while an additional $24 billion is allocated for investment tax credits to encourage companies to research and manufacture chips in the U.S., with the remaining $200 billion to be used as scientific research funds over the next few years, focusing on frontier technologies such as artificial intelligence (AI), robotics, and quantum computing.

Reuters pointed out that although the grants under the Chips Act have been signed, they only began to be distributed shortly before Biden left office. The specific details remain undisclosed, but it appears that these subsidies will be disbursed as progress is made on the factories promised by the companies.

This means that the majority of the subsidies promised under the Chips Act have not yet been delivered. By the end of Biden's term, the U.S. Chips Program Office announced grants totaling $32.542 billion and provided $5.5 billion in loans to fund 48 projects for 32 companies, but only $4.3 billion was actually implemented. Relevant commitments also included promoting total investments exceeding $380 billion over 20 years, with most of this expected to be completed before 2030.

Trump has always been dissatisfied with Biden's Chips Act. He believed that spending money to bring foreign companies to build factories in the U.S. is "very bad" and suggested increasing tariffs instead to force chip manufacturers to set up factories in the U.S. Bloomberg reported that although Trump urged Congress to repeal the Chips Act, neither Republican nor Democratic lawmakers were willing to abolish the bill.

Analysts said that although Trump is unlikely to withdraw the bill, he can reinterpret it to "allocate funds differently."

In nearly two hours of testimony, Raimondo discussed a series of issues related to the semiconductor industry, including how the U.S. government plans to attract more investment in chips.

Raimondo defended Trump's move last month to rescind the Biden administration's AI chip export restrictions, stating that the so-called "AI diffusion rule" aimed to prevent China from obtaining advanced semiconductors from third parties but was "illogical." The Trump team is now turning to negotiate separately with each country.

"Our view is that we will allow our allies to purchase AI chips," Raimondo said, provided that these chips are operated by approved U.S. data centers and cloud services connected to these data centers are provided by approved U.S. operators.

Bloomberg reported that the measures taken by the U.S. to curb China's technological ambitions have created tensions, exacerbating trade conflicts between the world's two largest economies. The Trump administration has taken action to pressure allies not to use Huawei's new Ascend chips, further tightening China's chip export rules, and is formulating more regulations to restrict China's development in AI and chips.

Raimondo "boasted" that China still lacks the ability to mass-produce complex semiconductors, and U.S. export controls have limited China's technological advancement.

However, insiders and analysts, including Nvidia CEO Jensen Huang, believe that the chip restrictions imposed to curb China's AI development are actually "more harmful than beneficial," causing greater harm to U.S. companies and accelerating China's development, narrowing the gap in AI capabilities between China and the U.S.

This article is an exclusive contribution from Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7512388187277361683/

Disclaimer: The views expressed in this article are solely those of the author. Please express your attitude by clicking the "Like/Dislike" button below.