With billions at stake, Trump administration scrubs federal chips contracts for words like ‘diversity’ and ‘immigrant’

Washington (CNN) — The Trump White House is demanding that government workers hunt for words like “immigrant” and “diversity” in billions of dollars worth of federal contracts with American companies to boost domestic semiconductor manufacturing, raising concerns among staff that the contracts could modified or voided.

On Friday night, workers at the Commerce Department office charged with overseeing the buildout of American semiconductor chip factories and training the workforce to make them received a list of dozens of words to search, according to a source familiar with the effort. The Tuesday deadline gave them just a handful of days to comply.

The CHIPS and Science Act, a Biden administration priority, passed Congress with bipartisan majorities. But the new administration is scrutinizing CHIPS contracts for those buzzwords as it seeks to enforce a series of executive orders President Donald Trump signed in his first days in office.

A sampling: immigrant, undocumented, foreign assistance, Green New Deal, climate change, diversity, equity, racism, discrimination, transgender, LGBT, abortion, pregnant, birth control and fetus. There are nearly 150 terms in all.

The stakes are high: The government has allocated more than $5 billion to the National Semiconductor Technology Center to make sure the US isn’t dependent on China or any other country for the critical semiconductor chips that power everything from artificial intelligence to the cars we drive. Of it, $250 million is allocated to creating a workforce training center based in Silicon Valley.

Congressional Republicans and other conservative critics have complained since the CHIPS Act passed that the Biden administration was making US companies meet too many requirements related to diversity and other liberal priorities in order to qualify for contracts. The Trump administration could simply be looking to modify the contracts to remove those requirements.

The possibility that the administration could go further and cancel contracts raises the prospect that the Trump administration will punish companies for doing what the Biden administration required them to do. It could mean facilities couldn’t be built or the government couldn’t contract with universities to do the cutting-edge research required. It could set the US effort back years.

“People do not fully appreciate the risk that this administration is just going to void these contracts and start from scratch,” one source familiar with the program told CNN. “It has national security implications, supply chain implications.”

The White House referred CNN’s questions to the Commerce Department, which didn’t respond to a request for comment.

One of the most sensitive issues is the American relationship with the Taiwan Semiconductor Manufacturing Company, or TSMC, which currently operates the only functioning advanced semiconductor plant in the United States. They’ve only been able to get it up and running by bringing over skilled workers from Taiwan.

“If [the Trump administration] voids a contract that lets them bring over workers – that’s going to be a huge problem for any company that’s not based in the US, and specifically TSMC,” the source said.

Another concern for the effort to build more chips is Elon Musk’s Department of Government Efficiency. DOGE staff have been going almost door to door in the federal government slashing programs and demanding access to processes and systems. CNN sources said they had not yet gone knocking on the CHIPS office door at the Commerce Department, choosing instead to focus on the National Oceanic and Atmospheric Administration and other areas.

But one of the biggest challenges to building chips was convincing private companies to reveal sensitive information about their businesses to the federal government, with the promise it would be kept under lock and key. Companies like TSMC, Intel, Micron and a number of other advanced packaging companies turned over financial projections, growth plans, internal modeling, and information about how advanced their research and development is – functionally the trade secrets that allow them to stay competitive.

The companies were not happy about having to give all of it up during the process, but received assurances it would be kept safe from competitors and the public. The fact that Musk himself is a federal contractor and proprietor of multiple technology companies adds a layer of potential worry for those companies that turned over info to the government.

“No one anticipated Elon Musk could come in and blow the lock off the safe,” the source familiar with the program said.

DOGE spokespeople didn’t respond to CNN’s requests for comment.

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