CHIPS Act dies because employees are fired – NIST CHIPS people are probationary

– NIST to lose 100’s of mainly CHIPS Act people
– If no people are left to administer CHIPS Act it dies by default
– Following USAID play book to kill an unwanted program
– Using the “probationary” clause as excuse to fire recent CHIPS hires

Trump will kill CHIPS Act by gutting NIST employees

Much as was seen in the gutting of the USAID program by essentially firing all of the employees save a few to turn off the lights when exiting, so too will Trump’s disliked CHIPS Act program get killed by default by firing all the recently hired CHIPS Act employees using the “Probationary” excuse to get rid of thousands of other government employees.

NIST, which is the government department under which CHIPS lives is expecting 500 or more firings of “probationary” people.

The vast majority of those to be terminated at NIST are associated with the CHIPS Act as they are the most recently hired with most of them being hired in the last year as Biden ramped up the CHIPS Act on his way out the door.

If there are no employees left to administer the CHIPS Act program, it is dead by default as there is no one left to certify that companies have met their requirements let alone write the checks.

Basically the program will cease to exist.

Usurping congress by mass firings.

We have confirmed with NIST people we know

NIST people have confirmed that they expect firings soon, likely this week and it sounds like CHIPS Act will be the primary target.

Also targeted are a lot of computer security and anti-hacking programs. AI safety programs at NIST appear to be impacted as well

The NIST news has been confirmed by the media

Media outlets have confirmed our view of what’s happening at NIST and CHIPS Act impact;

Bloomberg article on mass NIST firings in AI and CHIPS

The news was first broken by Axios;

Axios article on NIST CHIPS cuts

All National Institute of Standards and Technology probationary employees are bracing to be fired imminently, sources familiar with the matter told Axios.

Why it matters: The Trump administration’s cuts across the federal government are gutting agencies tasked with testing leading-edge AI technology and boosting domestic semiconductor development and manufacturing.

The cuts come at a time when the U.S. is looking to lead in AI development and stave off competition from China.

Driving the news: These cuts mean that the U.S. AI Safety Institute, which has been working on ensuring emerging AI models are trustworthy, is gutted, along with most staff working at NIST’s Chips for America program.

NIST is preparing to cut 497 people, according to sources familiar, which includes:

• 74 postdocs
• 57% of CHIPS staff focused on incentives
• 67% of CHIPS staff focused on R&D
• Context: NIST is facing an uncertain future. AISI lost its leader earlier this month and its staff were left out of the AI summit in Paris last week.

President Trump has also not yet announced a nominee to head up NIST.

Tariffs instead of CHIPS Act

Trump made it clear over the last few days that he will institute 25% tariffs on imported semiconductor devices, so it obvious that strategy is shifting from incentivizing US chip production to penalizing imports instead.

We don’t think that the administration has fully thought through all the ramifications as 100% of AI chips are imported from Taiwan and an increasing number of Intel chips are imported along with 100% of AMD and all other TSMC customers and the vast majority of memory chips…well over 80% of chips are foreign made.

We think this is more than a negotiating stance

We don’t think these actions are a bluff nor a negotiating tactic, its a complete change of course. Remember Taiwan “stole” the US chip industry and we won’t defend Taiwan because they aren’t paying us “protection” money……

We think that this also reduces the probability of TSMC taking over Intel manufacturing as handing the best US CHIP manufacturing to Taiwan runs counter to the new logic

The stocks

As we stated in our most recent note, the gutting of the CHIPS Act will add to the headwinds that the semiconductor industry is already facing going into 2025.

We are starting to think that 2025 could be a down year for WFE rather than a flat to slightly up years as recently expressed by many companies.

Obviously chip manufacturing companies will slow spending on programs they previously thought they were getting CHIPS Act funding for if not cancel those projects outright.

If I were running a chip company I would not count on CHIPS Act funding even if I had a signed contract as its clearly not worth the paper its written on if NIST is eviscerated.

“CHIPS Act , I hardly knew ya” (Dropkick Murphys)

About Semiconductor Advisors LLC

Semiconductor Advisors is an RIA (a Registered Investment Advisor), specializing in technology companies with particular emphasis on semiconductor and semiconductor equipment companies. We have been covering the space longer and been involved with more transactions than any other financial professional in the space. We provide research, consulting and advisory services on strategic and financial matters to both industry participants as well as investors. We offer expert, intelligent, balanced research and advice. Our opinions are very direct and honest and offer an unbiased view as compared to other sources.

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