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CHIPS Act Repeal Threatens Costa Rica’s Semiconductor Hub Dreams

U.S. President Donald Trump has called on Congress to repeal the CHIPS Act, a 2022 law designed to bolster semiconductor manufacturing and reduce reliance on China by incentivizing production in allied nations like Costa Rica. Passed in August 2022 under President Joe Biden, the Act provided $39 billion in subsidies and $75 billion in credits to attract companies to countries such as Costa Rica, aiming to create jobs and establish the nation as a regional tech hub.

In a recent speech to Congress, Trump lambasted the legislation. “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 said. He urged lawmakers to “get rid of the CHIPS Act” and redirect any remaining funds to reduce national debt. While Congress has yet to vote on the proposal, the announcement has already sparked uncertainty.

The Biden administration had already allocated much of the $39 billion, signing contracts with companies like Taiwan’s TSMC, which received at least $1.5 billion. Costa Rica, a key partner in the plan, welcomed U.S. firms like Applied Materials, Inc., which announced operations in the country last October after Costa Rican officials pitched the nation to Silicon Valley leaders. Now, those investments hang in the balance.

Costa Rican officials have not yet commented publicly, but analysts warn the repeal could force a strategic pivot. Reuters reported yesterday that the U.S. Commerce Department has begun dismantling CHIPS Act programs, with a third of its staff overseeing the subsidies notified of their dismissal. The fate of existing contracts remains unclear, raising questions about the broader semiconductor industry’s future in allied nations.

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