The U.S. Department of Commerce is reassessing several CHIPS and Science Act agreements with major chipmakers, aiming to secure more favorable terms for taxpayers amid proposed budget cuts. Secretary of Commerce Howard Lutnick told lawmakers Wednesday that the department is renegotiating deals that were initially “overly generous.”

“A 10% funding just seemed overly generous and we’ve been able to renegotiate them,” Lutnick stated during a congressional budget hearing. He emphasized that the department is now aiming to contribute “4% or less” toward the total cost of semiconductor projects.

One example he pointed to was Taiwan Semiconductor Manufacturing Co. (TSMC), which received a $6.6 billion CHIPS grant and has since significantly expanded its U.S. investment commitment to $100 billion, up from $65 billion. “So if the question is, ‘Are we renegotiating?’ The answer is, ‘Absolutely, for the benefit of the American taxpayer,’” Lutnick said.

The remarks came as Lutnick defended a proposed 16.5% budget reduction for the Commerce Department, which includes a $325 million cut to the National Institute of Standards and Technology (NIST). That agency oversees the CHIPS funding programs.

The department’s budget justification accused NIST of supporting a “radical climate agenda” through its Circular Economy Program, which it criticized for promoting “environmental alarmism.” While the CHIPS initiative wasn’t specifically targeted in the proposed cuts, the program’s future is facing political headwinds.

A report from NextGov indicated that the Trump administration has dismissed numerous NIST staff involved in CHIPS programs, and the former president has vocally opposed the initiative. “Your CHIPS Act is a horrible, horrible thing. We give hundreds of billions of dollars, and it doesn’t mean a thing. They take our money, and they don’t spend it,” Trump said in a March 4 address to Congress.

Although the Biden administration rushed to finalize many CHIPS contracts before leaving office, actual funding depends on milestone completions—many of which haven’t yet occurred. “Planning to distribute money only if we get much more building in America,” Lutnick said, reaffirming a performance-based approach.

Still, some lawmakers are wary of the renegotiation strategy. Sen. Jeff Merkley (D-Ore.) raised concerns that it could delay projects or deter investment. “To some degree you may be able to strike a better bargain, but at some point it doesn’t become a better bargain and we reduce the acceleration of our re-energizing [of] the chip industry,” Merkley said. Oregon is among the states with major CHIPS-funded projects, including $1.86 billion allocated to Intel’s Hillsboro facility.

As debates over funding and oversight continue, congressional Republicans aim to push a Senate funding package to President Trump’s desk by July 4.

Originally reported by Kate Magill in Construction Dive.