Rather than complaining about the legislation that’s already been enacted, let me, as they say on Jeopardy put it in the form of a question. There is little question that we need to produce more of the microchips we’re consuming domestically. We can’t allow ourselves to be dependent on China. Dependency on Taiwan makes us dependent on China, too. How do we accomplish that objective?
President Biden’s approach is subsidies for major chip manufacturing companies. I suspect that will prove disappointing although I’m sure that Intel, Nvidia, and TI, et alia are grateful for the dough. What else should we do.
Imposing tariffs on imported microchips will do some of what’s necessary. What else should we do?
My own pet proposal is to declare companies that use offshore (other than to Canada or Mexico) sources for the chips used in their products ineligible for government contracts. It wouldn’t need to be done all at once—it could be phased in.
Any other ideas?
Increase the diversity hiring requirements for US chipmakers. Seems to be the policy goal of the day……….
OK. Ok. Yes, I too think govt contracts are a key.
There’s something wrong with seeing a Nissan Kicks (made 100% in Japan) with USG plates. Though nothing wrong with say a VW hybrid built in Tennessee with the same plates.
Subsidies wont incentivize Intel but tariffs would? Why wouldn’t Intel just increase prices and say thx for the dough with tariffs? Also, we dont just need more chips but we need state of the art chips. At present Nvidia and TI dont make those and Intel doesnt really quite make them, or didnt last I checked.
Steve
Steve
With tariffs there is at least some chance of start-ups and smaller existing producers capturing some of the increased market. With subsidies there is none.
The chip subsidies will come with all sorts of demands and restrictions:
https://www.reuters.com/technology/us-require-companies-winning-chipmaking-subsidies-share-excess-profits-2023-02-28/
Some companies will refuse to join. One thinks of legalized marijuana states, in which licensed companies cannot compete with the illegal trade because of taxes, fees, and regulations.
If you want an American (high cost) chip making sector you have to ban the import of chips and products containing foreign chips
The only alternatives we have are having a domestic chip-making sector or doing what the Chinese government tells us to do when it tells us to do it.
You do realize that the costs for a new state of the art plant are huge? What start up will have that kind of money?
Steve
That sounds like an opportunity to me.