US chip taxpayers – The New York Times

The United States has authorized $280 billion in taxpayer dollars to subsidize wealthy computer chip companies and invest in technology research to keep America strong and innovative.

President Biden on Tuesday Signed The legislation, formally known as the Science and CHIPS Act of 2022, calls it “an investment in America itself.”

If the law does what many of its advocates in government and private industry hope, the US will have more control over the future of essential computer chips and have a hedge if China China became more hostile towards Taiwan, an ally of the United States. The law also aims to keep the US at the forefront of technology by providing more government support for research.

Here’s why the law exists and what it can, and can’t, do to help America:

Dream of American-made chips:

The law authorizes more than $52 billion to help companies pay for the construction or expansion of U.S. computer chip factories, as well as research and worker training. In short, American taxpayers are paying computer chip companies to manufacture their products here, not in Germany or South Korea.

Why? U.S. officials are concerned that a relatively small percentage of the world’s computer chips are made in the United States and barely include the most sophisticated chips used in military equipment and smartphones.

The first concern is not necessarily valid. A lot of the basic computer chips are like those used for computer memory or the brains in home appliances, and the US probably doesn’t need to make more chips. The production of many consumer goods such as T-shirts and TVs is outsourced to other countries.

But for two big reasons, proponents of the bill say the US should use government money to make it financially valuable to both American and foreign corporations to make more computer chips. than in the states.

First, supporters say it’s important for America to preserve expert knowledge in the design and construction of advanced computer chips. We don’t have the same national interest in maintaining our t-shirt making know-how. Building computer chip factories costs tons, and in the US it is more expensive than in other countries, partly because other governments subsidize it. This new law will allow the United States to help level the playing field.

The second reason is the potential vulnerability of Taiwan, home of Taiwan Semiconductor Manufacturing Company, which makes custom-made chips for many companies including Apple. If you have a smartphone or shop online, chips made by TSMC may be relevant. If China continues escalate its military confrontations With Taiwan, supplying most of the advanced computer chips in the world could be at risk.

A little more chip manufacturing support in the US will most likely not affect TSMC’s hold on more advanced chips. America’s small share of advanced computer chip manufacturing is partly the result of Fight of the country’s top chipmaker, Intel. A government bill won’t change that.

But many executives and government officials believe the benefits of encouraging more chip production in the US are worth the risk of wasting money paying taxes to chip companies.

Most law is about basic research – for better or for worse.

There are about 200 billion dollars for programs aimed at American inventions.

Money is flowing to create 20 regional technology hubs for government-supported developments in areas such as chips, energy technology and biotechnology. Taxpayer money is spread to other government agencies to train Americans in the jobs of the next generation, and scientific and technical research is not immediately profitable.

The recent Wall Street Journal editorial board describe this part of the law as a wasteful extension of the federal bureaucracy and the possibly fruitless cooperation of government and large industry.

That may be true, despite a long history of government essential for American innovation. We may not have a computer chip, the internet or Vaccines against covid-19 without cooperation between big government and big business. Of course, more government spending does not necessarily translate into more innovation, as China search with the government-backed computer chip initiative.

What this law will not do.

Despite what some corporate executives and state officials have said, putting government money on computer chips is very likely. will not solve shortages of products such as cars.

Automakers have struggled to make as many cars as Americans want to buy. That’s partly because they can’t buy enough chips for features like navigation and braking systems. But building more chips in the US won’t solve that. This problem is caused by an increase in consumer spending on physical products, coronavirus-related factory shutdowns and manufacturers’ failed to adapt to new realities.

Scott Lincicome, an economist at the Cato Institute, a liberal think tank, gave me formula as an example. American factories produce nearly all of the infant formula consumed in the country. That has not prevented – and may have contributed to – bare recipe store shelves in the US this year.

Some computer chip companies and legislators also recently stress that expanding chip production in the United States would create more high-wage jobs. Economists have long careful on public performance that helps pay for jobs in a number of industries.

Like climate, taxes and healthcare bills that Congress is expected to pass this week the chip law is ambitious and may not show its worth for many years. But at a time when the federal government is stuck with many national priorities, elected officials have actually done something that could prove crucial.

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This cat doesn’t care what the rules are. It will sitting on the freezer.

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