Bill stagnates America’s critical chip infrastructure

Written by Jack Elbaum

What’s happening: The CHIPS and Science Act, ratified about a year and a half ago, allocated billions of dollars to subsidize U.S. semiconductor chip manufacturers. But it has yet to produce the results hoped for by advocates on both sides of the aisle.

• Nevertheless: Failure hasn’t stopped President Biden from consistently touting the bill as being instrumental in reducing prices, most recently in his State of the Union address.

• Context: Semiconductor chips facilitate fast and efficient operation of modern electronic devices. They are also crucial in military and AI applications; new, improved chips are continually being developed.

Why this matters: Producing semiconductor chips domestically makes the U.S. less susceptible to global supply chain disruptions — which are more probable during crises — and less dependent on rivals such as China. Consequently, subsidizing the domestic industry was considered an effective method for achieving greater independence and stability.

However: The bill has not accomplished what was intended. Most big projects utilizing subsidy money are nowhere near completion and have been repeatedly delayed. Projects with Intel, Samsung, and the Taiwan Semiconductor Manufacturing Company — all scheduled to be built in America — have suffered that fate.

• Also: In the years following the passage of the CHIPS Act, Congress authorized far less spending than appropriated in the original bill.

Another issue: The federal government is incorporating DEI into the law and demanding that corporations adhere to union demands regarding wages and childcare in order to be eligible for chip subsidies.

• DEI: A factsheet explicitly instructs the Department of Commerce to ensure that workplace DEI is expanded to “include significant investments to create opportunities for Americans from historically underserved communities.” The directive specifies hiring and training people of color, women, and “justice-involved individuals” (ie. former convicts).

• Beyond the headlines: State subsidies include the authority to attach strings to taxpayer dollars. Under a Democrat administration, those strings will inevitably reflect Democrat values — throwing into question the prudence of such policy among conservatives.