Hobbling rivals won’t make US champion

Within 24 hours of US President Joe Biden signing the CHIPS and Science Act to offer $52.7 billion in subsidies and extra tax credits for US semiconductor production and research, three leading share markets in the United States have taken a hit. Especially, share prices of semiconductor companies such as Nvidia and Micron Technology have slumped by over 3 percent.

That’s a typical case of the market teaching officials a lesson. US politicians rolled out the Act to strengthen their semiconductor manufacturing and research, but giving huge subsidies to US chipmakers is an obvious move to hinder all other players and perpetuate US’ hegemony in the chip industry.

This is against globalization, which is all about more countries sharing process technologies to serve the whole of humanity. The US’ share in the global semiconductor sector has fallen from 37 percent in 1990 to 12 percent now.

The sharing of process technology means gains for other economies but not necessarily losses for the US. On the contrary, by more deeply participating in the global network, the US is also benefiting from lower costs of manufacturing chips.

Yet, certain narrow-minded US politicians have pushed the Act, which will not only launch a zerosum game, but also lead to a loselose outcome.

Moreover, the Act is specifically targeted at China as it forbids US federal-funded companies from producing high-end chips in China. As a result, TSMC, Samsung, Intel, Micron Technology and all chip companies that have factories in both China and the US will be under heavy pressure to take sides.

That will deal a heavy blow to the chips sector and cause turbulence in the market, as evidenced by falling indexes in US stock markets.

Certain US politicians must learn that hobbling every other player won’t make them a champion. Only when the global chips industry prospers as a whole will the US reap its advantages.