The Top Seven Reasons to Oppose New Semiconductor Subsidies

Scott Lincicome and Ilana BlumsackAs the global semiconductorshortage persists, chipmakers have renewed theirefforts to convince Congress to hand them tens of billions of taxpayer dollars. Earlier this year, the U.S. Senatepassed a $52 billion subsidy package for this very purpose. Its fate remains unclear in the House of Representatives, but a vote on some sort of government support for domestic chip production is expected in the coming weeks (though perhaps after the new year). Before members vote again on any such subsidies, however, we provide below seven reasons why broad, strings-free subsidization of U.S. semiconductor manufacturing – similar to what passed the Senate – is not only costly and unnecessary, but perhaps even harmful for the industry itself:1. American chip manufacturing has been increasing, and the industry is healthy.While America ’sshare of global chip production hasfallen from 37% in 1990 to 12% in 2019 – a stat subsidy advocates mention at every opportunity – real output and capital expenditures (CapEx) in the United States haveincreased substantially over the same period (see Figures 1 and 2). This growth, moreover, is not merely in dollar terms. As a 2020report from the Semiconductor Industry Association shows, domestic wafer manufacturing capacity has increased from under 2 million units per month in 2000 to nearly 3 million units in 2018 (see Figure 3), and U.S.-based semiconductor firms still produce a plurality (44%) of their wafer sup...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs