Even IBM’s CEO Arvind Krishna is concerned with these drastic proposed budget cuts. He warns that cuts like these would be devastating to federal R&D funding for AI and related technologies. The Trump administration is actively working to cut billions from federal grantmaking and scientific research programs. In turn, Krishna is calling attention to the critical need for more investments in R&D and STEM education to drive economic growth and restore the United States’ technological competitiveness.
This appears to be a coincidence, as the Trump administration has drastically slashed the TIP Directorate’s budget. This office has been a key actor in shaping the direction of AI research. This action is intended to eliminate over 50% of the National Science Foundation’s budget. It aims at what federal officials generally identify as the bastions of wasteful and duplicative spending. Consequently, billions of dollars are at serious risk. This second threat stems from the risk of cuts in federal AI and IT R&D spending.
IBM might have been the last company anyone expected to announce this most worrisome of news. In July 2023, the company had 15 federal contracts terminated for convenience, forfeiting the company about $100 million in expected future payments. These contracts are worth between 5% and just shy of 10% of IBM’s consulting practice. Though this was a huge blow, Krishna is still looking ahead to a more positive outlook for R&D federally funded.
“We have been an extremely strong advocate — and this is both the company and me personally — on that federally funded R&D should be increased,” Krishna stated. He is not shy about publicly taking the current level of federal R&D funding to task, calling it at historic lows relative to GDP. “We believe that [federal R&D funding] right now [is] happening at close to historic lows in terms of percentage of GDP, and that more federally funded R&D has an incredibly positive effect on the economy, on economic growth, on the competitiveness of the United States, and in investing in many technologies that are essential for our future,” he added.
Krishna further said that he hoped federal funding for AI, quantum-technologies, and semiconductors would get better during the coming year. “I expect that in a year […] federally funded R&D for AI, for quantum, for semiconductors — I expect it to be in as good or in a better shape than it is today,” he remarked.
The Trump administration’s budget proposal for fiscal year 2026 seeks to prioritize financial cuts to various scientific initiatives, which starkly contrasts with previous administrations’ approaches toward research funding. The administration is now reportedly threatening to withdraw the CHIPS Act, legislation designed to increase domestic semiconductor production. Earlier this year, they decimated the office that was set up to manage this money.
As the battle to re-establish comparable federal funding continues, technological innovation, competitiveness, and economic growth industry leaders like Krishna are acutely concerned with what these impending budget cuts mean for technological innovation.
