August 1, 2022


“The U.S. House of Representatives passed sweeping legislation [last] Thursday to subsidize the domestic semiconductor industry… The bill provides about $52 billion in government subsidies for U.S. production of semiconductors used in everything from automobiles and high-tech weaponry to electronic devices and video games. It also includes an investment tax credit for chip plants estimated to be worth $24 billion… The legislation would also authorize $200 billion over 10 years to boost U.S. scientific research to better compete with China.” Reuters

Many on both sides support the bill, arguing that it is necessary to counter China:

MIT professor Jesús del Alamo states, “The technology [to manufacture advanced chips] is unbelievably complex. It takes many many years of research and development to bring a new technology to the marketplace. If you look at the numbers that companies are investing in Arizona, Texas, and Ohio, we’re talking about manufacturing facilities that are way in excess of $10 billion. One facility, as much as $17 billion. Imagine the bet it represents for a company to decide to set up a new plant. This is a gigantic bet that could sink the company if you make the wrong decision…

“For a long time in Asia, countries have seen the strategic value of these technologies, and they have been supporting their companies in R&D and setting up manufacturing facilities on their own soil. The U.S. has done none of that, and that’s what needs to be corrected. We need to match the incentives that Taiwan, South Korea, and China are offering to their manufacturers to set up plants onshore to get to the leading edge and stay there.”
Matt Stieb, New York Magazine

“American labs developed the transistor and integrated circuit in the middle of the 20th century and figured out how to print them on silicon, giving rise to Silicon Valley. The industry's leader, Intel, pushed the envelope on smaller, faster chips… But then Taiwan and South Korea began making huge investments in, and providing generous subsidies for, their own semiconductor firms… Analysts estimate that, thanks mostly to these policies, building an advanced foundry in the United States can cost 50% more than in those East Asian countries…

“Globally, the US share of semiconductor manufacturing has fallen by two-thirds since 1990, to 12%, and is still falling. Already lapped by other Asian competitors, the next threat comes from China, which has been making huge investments in the industry under its ‘Made in China 2025’ strategy… Better late than never, American policymakers have awakened to the threat posed by the loss of global leadership in such a vital technology, especially if an adversary like China takes the reins from the US.”
Oren Cass, CNN

“CHIPS also helps the United States go on offense, incrementally improving our ability to shape the industry as a whole and to constrain semiconductor manufacturing in China. About 16 percent of global silicon wafers are produced in China, two-thirds of which are made by foreign companies, all of whom are looking for a piece of the CHIPS pie. This means Washington will have a significant say over most of the chip manufacturing in China in a way that it currently does not…

“CHIPS recipients are prohibited from pursuing any ‘material expansion’ of Chinese chips below 28 nanometers (28nm), which are almost two decades behind the state of the art. For those accepting CHIPS funding, the legislation effectively freezes their chip production capabilities in China at the current levels… Practically speaking, CHIPS forces its recipients to begin decoupling from China by limiting their overall ability to modernize and therefore pushing them incrementally toward the United States and other, mostly democratic, nations.”
Klon Kitchen, The Dispatch

“[The] $52 billion in subsidies to domestic semiconductor manufacturers may well help the United States compete with China, which has invested a whopping $150 billion of its own…

“Yet the innovation component has always been more important than the manufacturing subsidies, if less discussed. This country has a far better chance at taking the next technological leap before its adversaries get there than it does at outspending them. By authorizing the largest five-year investment in public research and development in the nation’s history (to the tune of $82.5 billion in new spending) to boost advances in artificial intelligence, quantum computing and more, the bill moves the country closer to that goal.”
Editorial Board, Washington Post

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