The United States is committed to manufacturing its microchips in-house. Last August, President Joe Biden promulgated the Science and Chips Act (Creating Helpful Incentives to Produce Semiconductors), an initiative that seeks to stamp out some inconveniences the North American country is facing on several fronts. The guideline of the measure is based on the local production of semiconductors, so-called microchips, which are required for the production of digital or electronic devices such as mobile phones, computers and automobiles.
This law is supported by a total investment of $280,000 million, of which $52,000 million is proposed to be allocated to the construction and expansion of plants and factories for these sophisticated devices. A total of 100,000 million would be allocated to semiconductor research and development over the next five years. The approach is to strengthen the internal technology sector as a defense strategy and avoid dependence on the international market in this area. Creating jobs while trying to reach China, the main competitor in the technology sector on a global scale.
President Biden signs CHIPS at the White House in August 2022. Carolyn Kaster (AP)
Addressing the global chip shortage
The coronavirus health crisis halted the semiconductor production cycle around the globe, leaving the automotive, telephone and computer industries at the expense of previously reported reserves. The affected production chain in the United States revealed what experts predicted long ago about the dependency of this big little screw in the local and international economic machinery.
Reduction of dependency on Taiwan
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Quite quietly, Taiwan has been gaining ground as the world’s leading chip maker. It produces about 25% of the semiconductors used on earth. It is precisely this resource that has opened the doors to new debates about the intentions and backgrounds of the recent trade confrontations and the ongoing military threats between major powers China and the United States.
Stop the Chinese Menace
The United States has significantly reduced semiconductor production over the past thirty years. In the 1990s it produced 37% of the chips used in the country, currently it supports the manufacture of 12%, according to the United States Semiconductor Industry Association. Companies participating in its production gradually left the North American country to settle mainly in Asia, where they found advantages in production costs.
China was the main beneficiary of this industrial migration, leaving minimal assembly work to the United States. The Biden administration proposes that the CHIPS law not only address the shortage, but also maintain the circular flow of production in the country and avoid dependence on foreign companies, mainly Asian ones, as much as possible.
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