• The Trump administration has cut 10% of funding for the agency overseeing semiconductor export controls to China, raising alarms in the Senate.
  • The move comes amid broader calls to repeal the $53 billion CHIPS and Science Act, with 40 Commerce Department workers already laid off.
  • Industry experts warn the cuts could jeopardize U.S. competitiveness against China's growing semiconductor dominance.

Funding Cuts Meet Political Resistance

The Trump administration's decision to reduce funding for the semiconductor export control agency by 10% has drawn sharp criticism from Senate members, particularly those who championed the 2022 CHIPS and Science Act. Sources familiar with the matter say the cuts are part of a broader shift toward using tariffs rather than subsidies to boost domestic chip production.

"This is a dangerous game to play when China is investing $140 billion in their tech sector," said one Senate staffer, speaking on condition of anonymity. The Commerce Department declined to comment on the layoffs of 40 CHIPS program workers when reached for clarification.

Industry Implications

The funding reduction comes at a delicate moment for the semiconductor industry. TSMC recently committed to a $100 billion U.S. investment, while the CHIPS Act has already catalyzed nearly half a trillion dollars in planned tech investments nationwide. Industry analysts suggest the cuts could slow these initiatives and potentially impact tens of thousands of American jobs.

Private sector executives expressed cautious concern. "Regulatory stability matters for long-term investments," said a semiconductor executive who asked not to be named due to ongoing government contracts. The administration's tariff-focused approach—while popular with some protectionist factions—has created uncertainty for manufacturers balancing global supply chains.

Global Competition Heats Up

As the U.S. debates its semiconductor strategy, China continues advancing its domestic capabilities. Beijing's massive tech fund and aggressive equipment acquisitions contrast sharply with the American policy shift. The Commerce Department is reportedly preparing additional curbs on AI chip exports to China, even as it faces internal budget constraints.

Multiple sources confirm the administration is weighing a full repeal of the CHIPS Act, though House Speaker Mike Johnson and other Republicans have signaled support for maintaining the funding. Without congressional intervention, experts warn the U.S. risks ceding ground in the global tech race.

Correction: An earlier version misstated the size of China's tech investment fund. The correct figure is roughly $140 billion.