Trump vs. CHIPS Act: Will America lose its technological advantage?

chiny24.com 3 months ago

Donald Trump, the current president of the United States, late called for the abolition of CHIPS and discipline Act, the flagship task of Joe Biden's erstwhile administration, which predicts $52 billion to support the American semiconductor industry. Trump argues that the bill is an example of excessive government interference in the marketplace and unnecessary waste of taxpayers' money. alternatively of subsidies, it proposes to proceed its policy of low taxation and deregulation, which, in its opinion, will better attract investments to the US.

However, this proposal raises serious questions: will the abolition of the CHIPS Act not weaken the U.S. position in the global technological race, peculiarly with China's aggressive policy? What happens to companies that have already invested billions of dollars in American semiconductor factories, hoping for government support? And can America afford to abandon this strategical initiative at a time erstwhile China is intensively developing its capabilities in the field of advanced technologies?

In this context, Trump's proposal becomes not only a political issue, but besides a strategical dilemma that can affect the future of the American economy and its global position.

History of CHIPS and discipline Act

CHIPS and discipline Act (Creating Helpful Incentives to Produce Semiconductors for America) is simply a bill adopted by the United States legislature in July 2022, signed by president Joe Biden on August 9, 2022. This law aims to strengthen the American semiconductor manufacture and technological innovation in consequence to global challenges, peculiarly from China. Its roots are concerns about US dependence on abroad semiconductor suppliers, which are crucial for the defence, automotive, telecommunications and technology industries.

The law provides for a intent $52 billion for subsidies to companies producing semiconductors in the US, as well as additional backing for investigation and improvement and education in discipline and technology. This was part of a broader Biden administration strategy to reconstruct the American technological advantage and global competitiveness.

Objectives CHIPS and discipline Act

Reduction of dependence on abroad semiconductor suppliers “The US wants to reduce its dependence on Taiwan, South Korea and China, which dominate the global semiconductor supply chain.
Creating fresh jobs – Investment in semiconductor production is intended to make high-paid jobs in the US.
Strengthening national security – Semiconductors are crucial for defence systems and their production in the US is to guarantee greater control of this strategical sector.
Promoting innovation – The Act is intended to support investigation and improvement in areas specified as artificial intelligence, quantum calculations and renewable energy.

Promotion of CHIPS Act by Biden Administration

Biden's administration promoted the CHIPS Act as a key component of economical strategy and national security. president Biden stressed that investments in semiconductors are essential to maintaining American competitiveness internationally. In his speeches, Biden frequently pointed to the risks of dependence on abroad suppliers, peculiarly in the context of geopolitical tensions with China.

The administration collaborated with congressmen from both parties to supply support for the bill, arguing that it is an investment in the future of America. As part of the promotion of the bill, Biden visited semiconductor factories and met with manufacture representatives, highlighting the benefits of local production.

Trump's proposal and its implications for investors

Donald Trump during the 4 March this year called for the abolition of the CHIPS Act, arguing that it is unnecessary government interference in the market. Trump considers subsidies to semiconductor companies to be costly and inefficient and alternatively to focus on taxation cuts and deregulation to attract investment.

For investors who have already engaged in projects in the US under the influence of the CHIPS Act, Trump's proposal may mean uncertainty. Companies that have received or plan to receive subsidies may fear changes in US government policies, which may affect their investment plans. In addition, the abolition of the law could undermine the competitiveness of the US vis-à-vis another countries specified as China that actively support their semiconductor industry.

The president cited fresh examples of global technology companies, specified as nipponese SoftBank and Taiwan Semiconductor Manufacturing Co. (TSMC), which announced fresh investments in the US, saying

"Your CHIPS bill is simply a terrible, horrible thing. We give hundreds of billions of dollars, and that means nothing... We don't gotta give them money."

TSMC and Samsung are the 2 possibly largest beneficiaries of the CHIPS Act, who were to receive $6.6 billion and $4.75 billion respectively of direct government funding.

Comparison with China's policy towards abroad investment

China has been pursuing aggressive policies to support its semiconductor manufacture for years, offering generous subsidies, taxation incentives and another incentives to home and abroad companies. The Chinese Government treats semiconductors as a strategical sector, key to achieving economical and technological objectives specified as the “Made in China 2025” initiative.

Unlike the US, where CHIPS Act is part of a wider strategy, China has a more centralised and long-term approach to supporting industry. However, Chinese policy frequently involves technology transfer requirements, which raises concerns among abroad investors and governments.

In conclusion, while the US is trying to rebuild its position in the global semiconductor supply chain through the CHIPS Act, China continues its policy of aggressively supporting industry, frequently at the expense of abroad competitors. Trump's proposal could weaken the U.S. position in this race, expanding uncertainty among investors.

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