Introduction
The CHIPS and Science Act, signed in August 2022, is the largest US industrial policy push into semiconductors since the Cold War. It set aside $50 billion for chips ($39 billion of manufacturing incentives and $11 billion for R&D) to pull leading-edge manufacturing back from Taiwan. What has changed is the instrument: the program has moved from grants toward government equity stakes and Section 232 tariffs, so CHIPS money now arrives with dilution and trade conditions attached. For TMT bankers that changes how subsidized companies are modeled, and it sits behind 2026 semiconductor M&A, heavy fab financing and cross-border deals where national security outranks competition analysis.
The Fab Buildout: TSMC, Samsung and Intel
The manufacturing awards were finalized as grants in late 2024, mostly to a few very large projects. Commerce has since renegotiated awards it considered overly generous: TSMC's grant stayed the same while its Arizona pledge rose by $100 billion to $165 billion.
| Company | CHIPS support | US project | Status |
|---|---|---|---|
| TSMC | $6.6B grant, up to $5B loans | $165B in Arizona | First fab in volume; later fabs step to 3nm, 2nm, A16 |
| Samsung | $4.745B grant | $37B+ in Taylor, Texas | Two fabs and an R&D center |
| Intel | $2.2B grants paid; $5.7B converted to equity | Fab 52 (Arizona); Ohio | 18A in volume; Ohio pushed to 2030-2031 |
Intel is the outlier. Its 18A process reached high-volume production at Fab 52, which Intel calls the most advanced node developed and manufactured in the United States, but its Ohio fabs have slipped about five years. That balance-sheet strain made Intel the test case for the program's new model.
From Grants to Equity: How CHIPS Money Is Now Modeled
In August 2025 the government agreed to buy 433.3 million new Intel shares at $20.47, an $8.9 billion investment for a 9.9% stake, funded by $5.7 billion of CHIPS grants awarded but not yet paid and $3.2 billion from the Secure Enclave defense program, according to Intel's announcement filed with the SEC. The stake is passive (no board seat, and the government votes with the board on most matters). In exchange, claw-backs on the earlier $2.2 billion grant were dropped, and the government received a five-year warrant for another 5% at $20 a share, exercisable only if Intel's ownership of its foundry falls below 51%.
Commerce has since made equity the default. On July 29, 2026 it signed letters of intent for $874 million of CHIPS R&D incentives with seven companies, led by GlobalFoundries (up to $300 million), taking a minority, non-controlling stake in each as a condition of funding, per the Commerce Department announcement.
Tariffs, Taiwan Risk and Cross-Border Deals
The second new lever is trade. A January 14, 2026 Section 232 proclamation imposed a 25% tariff on certain advanced computing chips, such as Nvidia's H200, when imports do not support the US technology buildout. EY's summary lists broad exemptions, including US data centers, R&D and startups, and a possible second phase of broader tariffs with a tariff offset program for companies building in the US. The Congressional Research Service notes the tariff also collects the 25% government share agreed for H200 sales to China.
- Section 232 Tariff
A Section 232 tariff is an import duty the President imposes under the Trade Expansion Act of 1962 after the Commerce Department finds that imports threaten US national security. It can be narrowly targeted and paired with exemptions that reward domestic production.
Tariffs and subsidies serve one end: less dependence on Taiwan, where the risk is concentrated and the geopolitical exposure spills into deal approvals.
M&A and Capital Markets Implications
The 2026 deals show reshoring and AI pushing consolidation toward analog scale, edge AI and domestic foundry capacity.
The financing need is just as large. A leading-edge fab costs tens of billions of dollars, and Intel's co-investment partnership with Brookfield showed how infrastructure capital can share the load. Government equity adds a passive state shareholder that any later sale, spin-off or regulatory approval must account for.
