Taxpayers for U.S. Chips – The New York Times

The United States has approved $280 billion in taxpayer money to subsidize wealthy computer chip companies and invest in technology research to keep America strong and innovative.

President Biden Tuesday signed Officially known as the CHIPS and Science Act of 2022, the law calls it an “investment in America itself.”

If the law goes as desired by many supporters in government and private industry, it would give the United States more control over the future of essential computer chips and give China more control over its ally Taiwan. The law also aims to keep America on the cutting edge of technology by increasing government support for research.

Here’s why the law exists and what it can and can’t do to help America.

Dream of American Chips:

The law authorizes more than $52 billion to help companies build and expand US computer chip factories, pay for research and train workers. In short, American taxpayers pay computer chip companies to make their products here, not in Germany or South Korea, for example.

why? US officials are concerned that a relatively small number of the world’s computer chips are made in the United States, including few of the most sophisticated chips used in military equipment and smartphones.

The first concern is not always valid. Many computer chips are so basic, like those used in computer memory and the brains of appliances, that the United States probably doesn’t need to produce more of them. Manufacturing of many consumer goods such as T-shirts and televisions is outsourced to other countries.

But for two big reasons, proponents of the law believe that the United States would make it financially worthwhile to use government funds to make more computer chips in the state for both U.S. and foreign companies. It says it should be something.

First, proponents say it is important for America to maintain its expertise in designing and manufacturing advanced computer chips. We don’t have the same national interest in maintaining T-shirt know-how. Building a computer chip factory is hugely expensive, more expensive in the US than in other countries. This is partly due to subsidies from other governments. This new law allows the United States to level the playing field.

The second reason is the potential vulnerability of Taiwan, home to Taiwan Semiconductor Manufacturing Company, which makes made-to-order chips for many companies, including Apple. If you have a smartphone or an online shop, chances are that a chip made by TSMC is involved. If China continues to escalate its military conflict with Taiwan, the supply of most of the world’s advanced computer chips could be in jeopardy.

Supporting a little more chip production in the US wouldn’t have much of an impact on TSMC’s hold on more advanced chips. It’s the result of struggling Intel, the country’s main chip maker. Government bills won’t change that.

But more executives and government officials believe the benefits of boosting chip production in the U.S. are worth the risk of wasting money on taxpayer subsidies to chip companies. .

Most of the law is about basic research, for better or worse.

About $200 billion is spent on programs aimed at American inventions.

Cash is flowing to create 20 regional technology centers for government-backed development in areas such as chips, energy technology and biotechnology. Taxpayers’ money is sprinkled on other government agencies for scientific and technological research that trains Americans for the next generation of jobs and has no immediate return.

The Wall Street Journal editorial board recently explained This part of the law is a futile extension of the federal bureaucracy and a possibly fruitless partnership between government and big business.

That may be true, but there is a long history of government being integral to America’s innovation. Hmm. Of course, increased government spending does not necessarily lead to increased innovation. We found it in our own government-backed computer chip initiative.

What this law does not do.

Despite what some business executives and public officials have said, spending government money on computer chips is unlikely to solve the shortage of products such as cars.

Automakers have struggled to make as many cars as Americans want to buy. One reason is the inability to buy enough chips for features such as navigation and braking systems. But making more chips in America won’t solve it.The problem has been compounded by surges in consumer spending on physical products, coronavirus-related factory shutdowns, and manufacturers’ failure to adapt to a new reality.

Scott Linthicum, an economist at the Cato Institute, a libertarian think tank, gave me infant formula as an example. US factories produce nearly all of the powdered milk consumed in this country. It did not, and may have contributed, to the bare store shelves of U.S. infant formula this year.

with some computer chip companies member of parliament recently emphasized Expanding chip manufacturing in the US will create higher paying jobs. Economists have long warned about the public’s effectiveness in helping pay for jobs in some industries.

Like the climate, tax and health bills Congress is set to pass this week, the tipping law is ambitious and may not deliver its benefits for years. But at a time when the federal government was bogged down with many national priorities, elected officials did something with a chip that might actually prove to be important.

Before you go…

• A former Twitter employee has been found guilty of aiding the Saudi government. My colleagues Karrie Huang and Kate Conger reported that a jury convicted a former employee of handing over dissident personal information to Saudi officials in exchange for gold and luxury watches. .

• Apps too important to block: The Russian government doesn’t like YouTube giving people access to a raw look at the war in Ukraine.But the Wall Street Journal report Russia, like other sites such as Facebook, is concerned that blocking YouTube will cause a public backlash. (Application required.)

• Politically motivated tourism: Some people who have an online following making travel videos go to Syria to make videos that cover up Syria’s brutal civil war and polish the reputation of the Syrian regime.Washington Post report. (Application may be required.)

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