American Chipmakers Innovate While Congress Debates Subsidizing Them

Scott LincicomeThe 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’slittle evidence that cash ‐​rich chipmakers need taxpayer money (by theirown admission); that the currentchip shortage will be solved by industrial policy; that U.S.semiconductor R&D or capital expenditures are suffering; or thatChina— 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”Perhaps most striking, what was a trickle of new chip companies is now approaching a flood. Equity investors for years viewed semico...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs