The US government office responsible for a marquee $52 billion chip subsidy program will lose about two-fifths of its staff as President Donald Trump slashes the federal workforce.
The reduction includes around 20 employees who accepted a voluntary deferred resignation and left the Chips Program Office last week, the people said. There also are about 40 who are considered probationary and will be terminated Monday, according to one of the people. Probationary employees are those who started their jobs, including promotions, in the past one to two years.
The terminations threaten to hamper implementation of the Chips and Science Act, a bipartisan law signed by President Joe Biden in 2022. Designed to boost domestic chipmaking after decades of production shifting to Asia, the program includes $39 billion in manufacturing grants to companies like Taiwan Semiconductor Manufacturing Co. and Intel Corp., plus $11 billion for research and development. It has prompted well over $400 billion in promised private investment, including chip factory spending and supply chain projects.
Commerce Secretary Howard Lutnick, the former chief executive officer of Cantor Fitzgerald LP, hasn’t expressed clear intentions for the Chips Act. But in remarks on Monday, he suggested that the legislation’s approach hasn’t generated the kind of payoff that Trump is poised to get with tariffs.
Lutnick spoke during the White House announcement of TSMC’s plan to invest an additional $100 billion in US manufacturing. With the Chips Act, the US gave a $6 billion grant to TSMC and received a pledge to invest $65 billion, he said.
“So America gave TSMC 10% of the money to build here,” Lutnick said at the event. “And now you’re seeing the power of Donald Trump’s presidency because TSMC, the greatest manufacturer of chips in the world, is coming to America with a $100 billion investment. And, of course, that is backed by the fact that they can come here because they can avoid paying tariffs.”
A representative for the Commerce Department, which oversees the office, didn’t immediately respond to a request for comment on the staffing cuts.
The previous administration built an office of about 140 people to oversee the Chips Act manufacturing spending, on top of staff responsible for R&D funding. Those officials allocated the vast majority of factory incentives before Biden left office, but only a small portion of that money has actually gone out the door. Under the negotiated contracts, companies receive payments when they reach construction and production milestones.
The staff cuts, while significant, aren’t as deep as some within the government and chip industry anticipated. In particular, they won’t have a major impact on the teams responsible for negotiating with companies and evaluating their progress toward contractual benchmarks, a person familiar with the matter said. The chips office leadership urged against cuts to those departments in recent meetings with Lutnick.
But it’s unclear how the office will proceed on a wide range of other matters, including the execution of manufacturing awards focused on smaller supply chain projects. The office has received applications for the $500 million program, but has not yet announced any winners.
Lutnick’s questions to current staff have focused on the rationale behind award decisions, the people said, as well as the government’s legal authority to claw back money that’s been disbursed. Lutnick is especially focused on rules limiting how much Chips Act winners can expand in China, the people said.
The program’s staff, meanwhile, have been preparing a list of potential amendments — to both the funding application process and contract terms — that would allow Lutnick to claim a win for the administration without causing major disruptions, according to two people. That could include removing language encouraging union contracts, the people said, or requirements to offer child care at major facilities — something many companies independently planned to do.
But it’s possible that Lutnick’s changes will prove more consequential than cosmetic. For weeks, he’s quietly led conversations with Intel and TSMC — which won the two largest Chips Act awards — about a possible deal that could see the Taiwanese company take over operation of Intel’s factories. That could involve changes to both companies’ awards, depending in part on the ownership structure of a potential partnership. Bloomberg