Sebastien Laye is an entrepreneur in technology and financial services, and an economist specialized in the economics of AI. He has lived on both sides of the Atlantic. He is also the Economic Policy Advisor for Republicans Overseas.

The semiconductor industry, a linchpin of modern technological civilization, stands at a crossroads in the United States. The CHIPS and Science Act of 2022, with its $52.7 billion promise, sought to ignite a renaissance in domestic chip manufacturing—a noble aim at the time amid rising geopolitical tensions and supply chain fragility. Yet, as President Donald Trump’s recent pledge to dismantle this legislation reverberates through the United States, a vigorous debate has erupted. Is the Act a flawed relic of industrial policy, or does it hold seeds of potential that a more discerning approach might cultivate? I believe that despite its lofty goals, its execution demands a radical rethink.

The Act’s detractors, myself included, have catalogued its shortcomings with precision. Its $30.6 billion in grants to 19 firms—household names like Intel, Samsung, and TSMC—has indeed spurred projects across multiple states, promising 145,000 jobs. Yet, this largesse comes at a steep cost. The high price tag exacerbates an already ballooning federal deficit, a concern that resonates deeply with fiscal conservatives. Worse, it showers subsidies on profitable corporations, raising the specter of "corporate welfare" and market distortions that could ripple across industries. The Act’s labor mandates—larded with social agendas—dilute its focus, misaligning resources when the urgent need is for skilled workers, not performative equity.

Moreover, the Act’s impact on supply chain resilience remains uncertain. Building domestic foundries is a glacial process, ill-suited to address immediate shortages, and lax oversight fails to prevent firms from shifting assets abroad. TSMC’s $100 billion commitment to U.S. soil, absent CHIPS funding, suggests that broader industrial, fiscal, and energy policies—not handouts—drive investment decisions. The Act’s scattershot approach has yielded a "timid renaissance," as I termed it, rather than a robust resurgence. Meanwhile, China’s low-end chip flood looms, underscoring the need for strategic clarity. The time to act is now.

Rescinding the CHIPS Act outright, as some propose, may falter in a divided Congress. Instead, we could refine it into a leaner, sharper tool.

Let us -for the sake of clarity, but I am not suggesting here an entirely new text- call it CHIPS 2.0. My proposals hereby eschew profligate spending for targeted reforms, i.e:

1. Deregulate the Supply Chain: Increase wafer and silicon production by slashing red tape on new facilities. Self-sufficiency demands control over raw inputs, not just finished chips.

2. Refocus Training: Redirect funds to hone AI-chip-specific skills, jettisoning social agendas. As my economists fellows have always argued, industrial policy falters without a skilled labor pipeline—community colleges and apprenticeships must lead the charge.

3. Environmental Exemptions: Free all semiconductor projects from the National Environmental Policy Act’s shackles. Micron’s stalled New York fab exemplifies the cost of delay.

4. Bolster public R&D: This one is going to be my most controversial proposal, but I still believe public academia and R&D is relevant for moonshot, innovative, deep tech projects. Fund cutting-edge microelectronics and quantum research through DARPA-like initiatives, cleansed of ideological baggage. Government excels in innovation, not output subsidies.

5. Go Global Strategically: Refocus the Select USA Summit on chips and data centers (attracting foreign capital to our domestic industrial base), guide outbound investments, and deepen ties with allies like Japan and South Korea which are significant players in the semiconductor industry. Tariffs and China decoupling complements this vision.

Additional safeguards—clawback provisions for non-compliant firms and technology-agnostic eligibility—can curb waste and favoritism, addressing critics’ legitimate fears.

The CHIPS Act’s legacy is a cautionary tale of overreach. Nevertheless it has proven that domestic semiconductor production can stir anew, offering a bulwark against China’s ambitions. A retooled CHIPS 2.0, grounded in deregulation, workforce readiness, and strategic diplomacy, can secure America’s place in the AI-driven future without breaking our budget or bending the market.

The Administration must act decisively. The semiconductor race is no mere economic contest—it is a test of national resilience. Let us not subsidize mediocrity when we can forge excellence.