Turning Point for American Industrial Policy or One-Hit Wonder?
As American politics sinks farther into the hole of partisan vitriol and dysfunctionality, we can be reminded of former George W. Bush administration Secretary of State Condoleezza Rice's statement that “we need a common enemy to unite us.” In this case, a common adversary―China―united Republicans and Democrats last month to pass landmark legislation: the CHIPS and Science Act. The two main features of the bill are to provide critical support for semiconductor firms and to boost science funding significantly, especially targeted to key technologies for U.S. competitiveness.
As Rob Atkinson writes in The Korea Times, the motivation for the semiconductor component was twofold. First, the United States has lost a massive global share of a key industry it created. Since 1990, America's share of global semiconductor manufacturing has declined by 70 percent, falling from 37 percent to 12 percent. And a significant portion of the growth in semiconductor production capability, besides being in Korea, was in Taiwan and China. Policymakers knew that China could weaponize that advantage, especially if they invade and take over Taiwan.
The $39 billion in the CHIPS Act for domestic semiconductor manufacturing investment incentives is designed to offset and level the playing field with regard to foreign incentives. The funding will go into the form of grants and loans to companies headquartered in the United States, or allied countries like South Korea, to help offset their costs of building a chip factory ("fab") in the United States...
