The reason for that is that a lot of that money is wasted, a lot of it goes to state-owned enterprises. They have poured hundreds of billions of dollars into this sector over a decade or more and they can't make most chips - they're still reliant on imported chips. If that were the right model, China would be the world leader in semiconductor technology. taking an ownership model - similar to that of China - since it’s providing so much subsidy to private semiconductor manufacturers? That to me is where the urgency comes from: It's not that we think China's going to invade Taiwan tomorrow … It's more, after COVID and after the Ukraine war, we really recognized that supply chains can really affect us.Īre there any advantages to the U.S. So I think the sense of urgency is that we need to start today because it takes several years to build a fab or develop the next generation of semiconductor technology. It's going to take a while to get ourselves out of it. But it took a long time to get ourselves into this situation through market forces, where the manufacturing essentially migrated to one place. No, I don't think there's any sense of imminent threat. If it were just a jobs thing, I don't think we would have to get $52 billion in the Chips Act that passed both the House and Senate.ĭo you think that sense of urgency means these leaders anticipate a serious escalation in the U.S.-China conflict? It's inimical to our economic and national security.” So that's the first thing, and maybe, you know, later on as the fourth or fifth thing, someone says, “Yeah, I want to create jobs in Ohio or France,” or what have you. Every government meeting I have, almost the first thing that an official says is, “We cannot rely on just Taiwan for chips. I have to say, the level of urgency that we're seeing from government leaders in the U.S., Europe and Japan is driven mostly by the national security concern.įrankly, the Chinese actions and statements with regard to Taiwan haven't helped either. Is the onshoring race more about national security or securing adequate supply for economic purposes? And in all the meetings my team does on the Hill, nobody has said, “We're opposed to the Chips Act.” Secretary Raimondo is doing a great job of keeping minds focused on the importance of this. There's also a risk that people say: “Ah, this is the only vehicle that's moving, so I want to attach my immigration provision my spending provision ” You put too many decorations on the Christmas tree and it falls over. With every day that we get closer to the midterms, that risk increases. But there's a risk that these other issues become so politically contentious that the thing doesn't proceed. So none of this has anything to do with chips. There is a dispute about outbound investment protections. The Senate has language in its bill calling for removal of some China tariffs the House doesn't have that.
The House spends $400 billion in total and the Senate spends $250 billion - that's not a small difference.
The House and Senate have both passed bills, but they're very different. The risk to the Chips Act is not the Chips Act itself it's that it's part of a bigger package that seems to be the only legislative vehicle likely to move before the midterms. Why is the Chips Act in danger? Isn’t it widely popular? On the European side, they're not interested in trying to out-subsidize the U.S. fails to act, rather than that we get into a subsidy war. So in a way, the bigger problem is the U.S. The language about “let's not have a subsidy war” - in a way, it makes me chuckle a little bit, because at the moment, we don't have anything in the U.S., and prospects for getting the Chips Act are more difficult with every passing day as we get closer to the midterm elections. The reality is the war in Ukraine, while it has nothing to do with chips in Taiwan, has reminded everybody - as COVID did - that supply chains need to be robust.
There's a recognition that over-reliance on Taiwan is neither economically wise nor prudent from a national security standpoint. There's clearly a global recognition that we need to build up semiconductor supply chain capabilities, particularly in the U.S., Europe and Japan. and EU agreed they want to collaborate to avoid a subsidy race.
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