US moves to regain US semiconductor industry

US moves to regain US semiconductor industry

The United States President Joe Biden signed the CHIPS and Science Act into law, kicking off the bid to regain US supremacy in semiconductor chips manufacturing.

The US has finally decided to make another exception of itself, despite the US preaching of the free market worldwide and emphasizing its fierce opposition to government interference in industrial policies, especially the use of government subsidies in other countries.

It sets a rare precedent in US industrial policy by earmarking $52.7 billion for semiconductor chip fabrication facilities in the US in the next five years. This is just part of a $280 billion law that also funds basic and applied research.

The Act is not just an industrial policy, but it is first and foremost an instrument to serve geopolitical purposes, which is annoying about the new US law to China and other countries and regions.

From the US Capitol to the White House, people have made no secret of the fact that the legislation is intended to suppress China's technological advancement. It prohibits companies that receive federal funding from expanding advanced chip manufacturing in China. It prevents companies from expanding production of anything more advanced than 28 nanometer designs, a technology that is already more than a decade old. Private recipients are subject to a 10 year ban on expanding certain chip manufacturing in China. It contains a special fund to help US telecommunications companies compete with the Chinese enterprise Huawei and limit the scope of other telecommunications firms with China ties.

The geopolitical imperative made the Act sail relatively smoothly through both chambers of the US Congress, propelled by the China-phobia that prevails in Washington's decision-making circles.

But what they aspire to is not only a costly undertaking, but it will also disrupt the industry and supply chains of the highly globalized industry and cause a heavy blow to existing industry giants who are not shored in the US.

While the US chip policy is primarily defined in terms of combating the China threat to US tech dominance, China is trying to speed up the development of the sector, but it has been triggered by these zero-sum moves by the US, which has prompted it to seek semiconductor self-sufficiency.

Since the central idea is cutting-edge technologies and capabilities in the field of semiconductor chips must be in the grip of the US, it will inflict conspicuous collateral damage on industrial giants in the Republic of Korea, Japan and China's Taiwan.

The law is good news for the shareholders of US chip companies, but bad news for tech R&D.