The Trump administration is set to significantly weaken the CHIPS Act by terminating hundreds of employees at the National Institute of Standards and Technology (NIST), the agency responsible for administering the semiconductor incentive program.   

President Biden signed the bipartisan CHIPS and Science Act two years ago, investing $53 billion to boost US  semiconductor supply chains, create jobs, and enhance national security. 

According to multiple sources, including Axios and Bloomberg, nearly 500 NIST employees, many of whom were recently hired to support the CHIPS Act, are expected to be dismissed under the pretext of “probationary” firings. 

Mass Firings Threaten CHIPS Act Viability 

According to Robert Maire, an author at SemiWiki, an open forum for semiconductor professionals, NIST, the federal agency under which the CHIPS Act operates, is reportedly preparing to cut 497 employees, with the vast majority working directly on the program. He says, according to sources familiar with the matter: 

• 57% of CHIPS staff focused on incentives will be let go. 
• 67% of CHIPS staff focused on research and development will be terminated. 
• 74 postdoctoral researchers will be among those dismissed. 

With no personnel left to oversee funding allocations and compliance, the CHIPS Act could effectively be dismantled without direct congressional action. 

AI and Cybersecurity Programs Also Targeted 

The layoffs extend beyond semiconductor initiatives. Reports indicate that programs focused on artificial intelligence safety and cybersecurity will also be significantly affected.  

The US AI Safety Institute (AISI), housed within NIST and dedicated to ensuring the reliability of emerging AI models, has already lost its leader earlier this month. With mass terminations imminent, the institute’s ability to continue its mission is in jeopardy. 

A Shift in Semiconductor Strategy 

President Trump has signaled a pivot from the CHIPS Act’s subsidy-based approach to a tariff-based strategy, proposing a 25% tariff on imported semiconductor devices. Instead of directly subsidizing domestic manufacturing, this move aims to penalize foreign chip imports. 

However, analysts warn that the ramifications could be severe, as the US remains heavily dependent on semiconductor imports. Currently: 

• 100% of AI chips used in the U.S. are imported from Taiwan. 
• Intel increasingly relies on foreign production. 
• 100% of AMD’s chips and the vast majority of memory chips are manufactured overseas. 

Fueling Uncertainty 

The expected dismantling of the CHIPS Act is likely to create uncertainty across the semiconductor industry. Companies that previously relied on CHIPS Act funding may now reconsider their investment plans.  

Analysts suggest that 2025 could see a downturn in wafer fabrication equipment (WFE) spending, reversing earlier projections of a stable or slightly positive year for the sector. 

Political and Strategic Implications 

The administration’s decision to gut the CHIPS Act workforce raises concerns over whether this move circumvents congressional intent. With no nominee yet announced to lead NIST, the agency faces an uncertain future.  

Meanwhile, the country risks losing ground in both AI safety regulation and semiconductor self-sufficiency at a time of heightened global competition, particularly with China. 

As the Trump administration moves forward with its restructuring of federal economic policies, the semiconductor industry and national security experts will be closely watching the fallout. 

Potentially Devastating Effects 

“As the Trump administration continues to hack its way through federal agencies indiscriminately, the latest victim appears to be NIST, reportedly losing at least 500 staff,” comments AI governance and application security expert Willy Leichter, CMO of AppSoc. “Using the logic of “last in, first out,” DOGE is ignoring the merits of employee roles or projects and simply terminating anyone they can easily dump.” 

Leichter adds that the other mandate seems to be to kill any initiative of the Biden administration, irrespective of its context or value. “On the chopping block are the new AI Safety Institute, tasked with ensuring the safety of AI models and systems, and the Chips for America program intended to protect sensitive chip technology from foreign (largely Chinese) theft. This comes on top of dismantling public and providing collaboration with the Cyber Safety Review Boards.” 

He says NIST provides a critical backbone for all cybersecurity with essential resources such as the National Vulnerability Database. By federal standards, the agency is small, with some 3,400 employees. Cutting 500 jobs is about 15% of the total workforce – a massive cut at a time when cyber risks are accelerating, and direct attacks on US critical infrastructure and government systems have never been higher.  

“AI is also a massive security wild card, and destroying important government safety checks could be devastating. The net effect will be to demoralize a critical and highly respected agency, embolden our adversaries to ratchet up their attacks, and put all of us at a direct financial and security risk,” Leichter ends.