“Reduce costs, create jobs, strengthen supply chains and counteract China”. The title of the news release published on Tuesday, August 9th on the US Presidency website is enough to measure the Semiconductors and Science Act, which was signed into law in the gardens of President Joe Biden’s White House on the same day.
He was surrounded by several big industry bosses, including Pat Gelsinger, general manager of Intel, America’s first electronic chip maker.
Launched by the Senate and supported by both Democrats and Republicans, this Chips and Science Act clearly aims to attack Chinese positions in the manufacture of components whose strategic nature has been exposed by the shortages caused by the Covid-19 pandemic became. The Chinese Embassy in Washington has also stated that it sees in this text – with regret – a “reminiscent of the spirit of the Cold War”.
His signature comes days after House Speaker Nancy Pelosi’s trip to Taiwan on Wednesday, August 3. By reviving tensions with Beijing, this visit reminded the United States of the dangers to national security of its reliance on components manufactured in China and more broadly in Southeast Asia.
According to the American Semiconductor Industry Association (SIA), the United States accounts for just 12% of the world’s chip manufacturing capacity, down three times from 1990. In 2020, 39 new factories will still be built, according to SIA. Globally, only four were on American soil, compared with ten in China, ten in Taiwan, five in South Korea, five in Japan, four in Europe and one in Singapore.
To reverse the balance of power, Washington is ready to table $52.7 billion in subsidies over 10 years, of which $39 billion will go to stimulus production on American soil. Two billion will be reserved for chips used in the automotive and defense industries alone. Additionally, industrial or equipment investments result in a 25% tax credit at an estimated cost of $24 billion.
To ensure the effectiveness of these measures, the US legislature imposes several restrictions. No way “Beneficiaries” this tool “build some facilities in China and other countries of concern”, warns the White House. Russia and Iran are involved, and North Korea is clarifying the text of the law. The beneficiaries must also commit not to increase the production capacity of their Chinese factories for high-performance chips for ten years.
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