CHIPS and the crumbs

CHIPS and the crumbs
By Klon Kitchen, ET CONTRIBUTORS
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Congress, therefore, has been debating a series of 'guardrails' that would allow this support to energise the American chip industry without also boosting the capacity of our chief geopolitical rival. These guardrails are a key point of contention....

The Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act meaningfully advances US interests, there are concerns.... Because so much of the semiconductor supply chain runs through Asia, there are concerns that recipients might use these funds to expand or improve their operations in China - thereby doing the exact opposite of what we're trying to do. Congress, therefore, has been debating a series of 'guardrails' that would allow this support to energise the American chip industry without also boosting the capacity of our chief geopolitical rival. These guardrails are a key point of contention....

I think we also must realise that foreign subsidies and our historical outsourcing of chip manufacturing puts us in a place where our ability to dictate the terms of this support is not as strong as we'd like it to be. If we, for example, say companies can get these funds only if they promise never to make any investments in their existing operations in China, no company will join our cause because the CHIPS funding simply doesn't compare to the losses that would follow such withdrawal. However, in the future, as the US position becomes stronger, maybe such demands will be within reach....

But CHIPS also means Washington will have a significant say over most of the chip manufacturing in China in a way that it currently does not.

From 'The CHIPS Act: Far From Perfect, But Still Very Good', American Enterprise Institute

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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