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A former top Wall Street banker and longtime Elon Musk ally has led a purge of the US government office charged with administering billions of dollars in semiconductor subsidies.
The Chips Program Office, a three-year-old agency at the heart of US attempts to bring vital chip manufacturing back to America, has become the latest target of the Trump administration’s attack on government bureaucracy.
Last week, Michael Grimes, a former Morgan Stanley investment banker who helped finance Musk’s $44bn Twitter acquisition, and a small entourage carried out a series of interviews with select staff at the Chips office, according to several people familiar with the matter.
Grimes and his team indicated to employees at the office, which sits within the Department of Commerce, that they were seeking a particular profile of the employees they were looking to retain.
“They were asking mathematical questions like: ‘What’s four to the fourth power?’,” said one person. Another said they had been asked questions about their “intellectual capacity”. A third described the interviews, which included senior staff, as “demeaning”.
A last-minute pushback at the weekend by senior staff against initial plans to axe all but five probationary staff members resulted in 22 ultimately being spared, the people said.
But dozens of employees on one- or two-year probationary contracts were still abruptly terminated, reflecting a directive from the Office of Personnel Management in January and clarified by the administration on Tuesday.
The office previously had roughly 150 employees. These staff dismissals came on top of a number who had already chosen to accept deferred resignation.
Those terminated included the entire “external and government affairs” team, as well as policy advisers in its strategy division, the people said. By Tuesday, some staff were already writing to agency leadership requesting to be reinstated.
A senior administration official confirmed that Grimes met staff but said that decisions on who to fire had been made in conjunction with leadership at the office and that he had not acted unilaterally.
Grimes has occupied a former general counsel suite on the fifth floor of the Department of Commerce, next door to commerce secretary Howard Lutnick, according to one person familiar with the matter.
“Everyone is very cagey about what Grimes is up to,” they said. “This is not a psychologically healthy place to work.”
Grimes is in the early weeks of a second career in government following three decades with Morgan Stanley, where he was one of the firm’s star investment bankers.
He led stock market listings for several tech companies, most notably winning the mandate to lead Uber’s IPO after working on the side as one of its drivers.
Several Musk allies have been recently installed in agencies across the US government, tasked with slashing costs and personnel. Similar efforts have been under way at USAID, the Department of Veterans Affairs, the GSA and even the defence department, with thousands of government workers laid off and billions of dollars’ worth of contracts ripped up.
In his speech to Congress on Tuesday, Trump described the 2022 Chips Act, one of the flagship policies of his predecessor Joe Biden, as a “horrible thing”. He said he would give the industry “no money” and called on House Speaker Mike Johnson to repeal the act and redistribute what funds remained.
Troubled US chipmaker Intel and Taiwan’s TSMC are among the largest beneficiaries of the Chips Act and have already received tranches of funding for major construction projects.
They were allocated $7.9bn and $6.6bn, respectively, with Intel receiving an additional $3bn via a Department of Defense initiative. South Korea’s Samsung has been allocated $4.8bn. All three companies declined to comment.
People familiar with the discussions between Trump’s team and industry said they could only speculate on what the latest moves could mean for the programme, with it now unclear whether they should expect a full rollback of the subsidies or a more measured reassessment of each deal.
But they added that, for now at least, key staff needed to oversee the distribution of the subsidies appeared to still be in place.
“President Trump was given a resounding mandate by the American people to restore common sense in government and reinvigorate American manufacturing with his America First economic policy of tariffs and deregulation,” said White House spokesperson Kush Desai in response to a request for comment.
“TSMC’s historic $100bn investment announcement is indicative of the real, tangible results that the Trump administration’s approach is delivering for the American people,” he added.
Additional reporting by Demetri Sevastopulo, Joshua Franklin, Antoine Gara, Joe Miller and Arash Massoudi
