American Chipmakers Innovate While Congress Debates Subsidizing Them

The Senate this week has begun considering the “The United States Innovation and Competition Act of 2021,” which — among many other things — appropriates $52 billion in subsidies for U.S. semiconductor manufacturing facilities and research and development. The stated justification for the bill, according to the fact sheet that accompanied the legislation, is “to encourage the development of domestic semiconductor manufacturing capabilities and ensure the U.S. stay on the cutting‐​edge of the industry with R&D” and to counter China, which is “aggressively investing over $150 billion in semiconductor manufacturing so they can control this key technology.” As I’ve written here previously, there’s little evidence that cash‐​rich chipmakers need taxpayer money (by their own admission); that the current chip shortage will be solved by industrial policy; that U.S. semiconductor R&D or capital expenditures are suffering; or that China — whose industry is years behind global leaders (including U.S.-based Intel) — is a major commercial threat. And, leaving aside the not‐​insignificant fact that the proposed subsidies do not actually target “cutting‐​edge” R&D, several recent headlines reinforce the aforementioned points: “Despite Chip Shortage, Chip Innovation Is Booming” “IBM says it has created the world’s smallest and most powerful microchip” “China’s progress in advanced semiconductor technology slows” The “crisis,” it seems, has been averted. Maybe someone should tell Congress.