Chips Act: A Second Look

The Chips and Science Act, signed into law two years ago, aimed to revive the US semiconductor industry by providing $52 billion in subsidies. So far, over half of this amount has been allocated to 15 chipmakers, including Intel, Taiwan Semiconductor Manufacturing Company, and Samsung. While this move has been welcomed, experts argue that the Act is missing key components crucial to supporting a robust chipmaking industry in the US. Steven Blank, co-founder of the Gordian Knot Center for National Security Innovation at Stanford, points out that the Act has neglected to provide funding for advanced chipmaking equipment companies like ASML, Applied Materials, KLA, and LAM, which dominate the space. The export controls placed on these companies haven't helped, as Tokyo Electron, a Japanese company, has seen a significant increase in sales, mostly to China.

If the Chips Act truly wants to create a sustainable chipmaking industry, it needs to address the technical stack necessary to build chips. This includes advanced chip manufacturing equipment, which is only available from a handful of companies worldwide. The Act's focus on export controls and cutting funding to US companies that make these machines has created a dam across half the river, stifling innovation and job creation. Moreover, the Act has failed to address potential workplace issues, such as low wages, grueling work schedules, and exposure to toxic chemicals. Semiconductor workers are concerned about these issues, and the industry's lack of transparency around the mix of chemicals used in chip fabrication has raised red flags. The Act also needs to tackle downstream supply chain costs. The US is heavily dependent on importing raw materials, components, and packaging equipment from countries like South Africa, Canada, and China. This raises concerns about the reliability of these imports and the potential for production disruptions. To mitigate this risk, the US needs to work on improving port capacity, customs clearance speed, and relations with China to partner on raw materials and minerals.

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