CHIPS Act Repeal Threatens Costa Rica’s Semiconductor Hub Aspirations
President Trump has requested Congress to repeal the CHIPS Act, which facilitates semiconductor manufacturing in countries like Costa Rica. The Act, passed in 2022, provided substantial financial incentives to attract companies. Trump’s call for repeal creates uncertainty for these initiatives, particularly as existing contracts and investments hang in the balance, raising concerns about the future of the semiconductor industry in the region.
United States President Donald Trump has called for the repeal of the CHIPS Act, which was established in 2022 to enhance semiconductor manufacturing and decrease dependency on China by encouraging production in allied nations such as Costa Rica. This legislation, enacted under President Joe Biden, allocated $39 billion in subsidies and $75 billion in tax credits to attract businesses to Costa Rica, with the goal of fostering job creation and developing the nation into a regional technology hub.
In a recent address to Congress, President Trump criticized the CHIPS Act, stating, “We’re not giving them any money. Your CHIPS Act is a horrible, horrible thing. We give hundreds of billions of dollars. It doesn’t mean anything.” He further implored lawmakers to “get rid of the CHIPS Act” and to redirect any remaining funds towards reducing the national debt. While Congress has yet to take a vote on this proposal, the announcement has already created significant uncertainty regarding the future of the semiconductor industry in allied nations.
The Biden administration had already committed much of the $39 billion allocated by the CHIPS Act, entering into contracts with companies such as Taiwan Semiconductor Manufacturing Company (TSMC), which received at least $1.5 billion. Costa Rica, a critical partner in this initiative, has recently attracted U.S. companies like Applied Materials, Inc., which began operations in the country last October after Costa Rican officials successfully advocated for investment from Silicon Valley leaders. However, the current situation places these investments at risk.
Although Costa Rican officials have yet to issue a public response, analysts caution that the potential repeal could necessitate a strategic shift for the country. As reported by Reuters, the U.S. Commerce Department has started to dismantle certain programs under the CHIPS Act, having notified one third of its staff overseeing these subsidies of their impending layoffs. The status of existing contracts remains ambiguous, raising significant concerns about the future of the semiconductor industry within allied nations.
The potential repeal of the CHIPS Act by President Trump poses a serious threat to Costa Rica’s ambitions in the semiconductor sector. With significant investments already made and contracts issued to major companies, the call to dismantle this legislation introduces substantial uncertainty. The current landscape necessitates a careful reevaluation of strategies for Costa Rica as it seeks to establish itself as a regional technology hub amidst these developments.
Original Source: ticotimes.net
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