How Trump Will Decide Which Chips Act Companies Must Give Up Equity

The landscape of U.S. semiconductor manufacturing subsidies is undergoing a fundamental shift. The Trump administration has confirmed a new, assertive strategy for distributing funds from the 2022 Chips Act, moving from grants to demanding equity stakes in certain recipient companies. This Chips Act equity policy marks a significant departure from previous practices and is causing major reverberations throughout the global tech industry.

How Will the New Chips Act Equity Policy Impact Companies?

The core of the new approach is a direct exchange: federal financial support for a piece of ownership. Commerce Secretary Howard Lutnick articulated the administration’s position, contrasting it with the prior strategy, which he characterized as giving money to companies like Intel and Taiwan Semiconductor Manufacturing Co. (TSMC) “for free.” The policy is not universal. Officials have clarified that large-scale manufacturers like TSMC and Micron Technology, which are actively increasing their U.S. investment pledges, are not currently targeted for such equity arrangements. Instead, the focus appears to be on companies that are not expanding their commitments or those perceived as needing more stringent oversight, with Intel being a primary example currently in negotiations for a potential 10% government stake.

A Strategic Lever for Increased US Investment

This equity-for-funding model is being used as a strategic lever to negotiate better terms for American taxpayers and to push for even greater domestic investment from chipmakers. Secretary Lutnick has been actively engaging with companies that have already been awarded Chips Act grants, urging them to increase their total financial commitments to U.S.-based projects. This interventionist approach extends beyond equity; President Trump has also suggested exempting companies that spend more in the U.S. from proposed steep tariffs on chip imports, further rewarding those who align with his domestic manufacturing goals. The administration recently took a similar 15% equity position in a producer of rare-earth materials, signaling a broader policy trend.

Industry Reactions and Legal Uncertainties

The potential for government ownership has not been met with uniform acceptance. Reports indicate that executives at TSMC, which was awarded up to $6.6 billion in subsidies for its Arizona facilities, have had preliminary internal discussions about the possibility of handing back their subsidies if the administration insists on becoming a stockholder. This highlights the tension between the desire for federal support and the reluctance to cede corporate control. Furthermore, any attempt to convert existing grant agreements into equity deals could face significant legal challenges, as the original terms of the Chips Act law were structured around profit-sharing above certain thresholds rather than direct government ownership.

The administration’s new Chips Act equity policy fundamentally redefines the government’s role from a benefactor to a strategic investor, placing conditions on corporate subsidies that prioritize taxpayer returns and maximal domestic expansion. This bold move creates a new calculus for semiconductor giants navigating the costly endeavor of onshoring production, ensuring that the path to federal funding is now a negotiated partnership rather than a simple grant. For the latest developments on U.S. industrial policy, continue to follow our reporting.

Must Know

What is the Trump administration’s new Chips Act policy?
The new policy involves the U.S. government taking equity stakes in certain semiconductor companies that receive federal subsidies under the 2022 Chips Act. This means the government would own a share of the company in exchange for funding, rather than just providing a grant.

Which companies are affected by the Chips Act equity policy?
The policy is not applied to all companies. Large firms like TSMC and Micron that are increasing their U.S. investments are currently exempt. The administration is focusing on companies that are not boosting their investment pledges, with Intel being a notable example in active discussions for a potential government stake.

Why is the government taking equity in chip companies?
Commerce Secretary Howard Lutnick stated the goal is to ensure American taxpayers get a “piece of the action” and a better return on investment. The policy is also a lever to pressure companies to commit more capital to U.S.-based manufacturing projects.

How has TSMC reacted to the equity policy?
According to reports, TSMC executives have privately discussed the possibility of returning their awarded subsidies if the U.S. government insists on taking an equity stake in the company, indicating significant resistance to the idea.

Could the equity policy face legal challenges?
Yes, legal challenges are a possibility. Attempting to alter the terms of existing grant agreements to include equity could be contested in court, as the original Chips Act legislation was structured around different financial mechanisms like profit-sharing.