Commerce Department Pushing to Scale Back CHIPS Act Contracts

The Commerce Department is working to renegotiate several multibillion-dollar contracts awarded to chipmakers through the CHIPS and Science Act, Commerce Secretary Howard Lutnick told lawmakers during a congressional budget hearing Wednesday.

Lutnick said he is pushing to cap funding levels at “4% or less” of each project’s total value. “A 10% funding just seemed overly generous, and we’ve been able to renegotiate them,” he said.

He pointed to Taiwan Semiconductor Manufacturing Co. as an example. The chipmaker, which was awarded $6.6 billion in CHIPS funding, has since committed to expand its U.S. investments. In March, the company announced plans to invest $100 billion in U.S. manufacturing, on top of an earlier $65 billion pledge. “So if the question is, ‘Are we renegotiating?’ The answer is, ‘Absolutely, for the benefit of the American taxpayer,’” Lutnick said.

Lutnick’s remarks came as senators pressed him on the department’s proposed 16.5% budget cut — which includes a $325 million reduction to the National Institute of Standards and Technology (NIST), the agency overseeing CHIPS and Science Act funding. Lutnick appeared on Capitol Hill to defend the department’s budget request, part of the broader federal funding bill now moving through Congress.

In its proposal, department officials attributed the NIST cuts to its “development of curricula that advance a radical climate agenda.” The proposal specifically cited NIST’s Circular Economy Program — which promotes sustainable, circular economies and supply chains — for advancing “environmental alarmism.”

While the budget language does not directly mention the CHIPS program, its future and staffing levels have already drawn scrutiny from the White House. According to a NextGov report, the Trump administration has fired dozens of NIST employees who had been working on CHIPS initiatives. The president has also called for ending the program entirely.

“Your CHIPS Act is a horrible, horrible thing. We give hundreds of billions of dollars, and it doesn’t mean a thing. They take our money, and they don’t spend it,” Trump said during a March 4 joint address to Congress.

The Biden administration had moved quickly to finalize many CHIPS contracts during the last weeks of the previous Trump presidency in an effort to lock in the funding. Under program rules, companies receive funds in phases as they meet project milestones — many of which have not yet been completed.

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