Would Semiconductor Subsidies Help Production Recovery?
Various government entities have been subsidizing semiconductor chip production around the world to combat the global chip shortage. Governmental subsidizing of private companies has been a source of strong opinion and kickback by many.
The United States government has made it clear that financial resources need to be directed at becoming less dependent on Taiwan when it comes to chip production and plans to invest in the building of new semiconductor fabs over the course of the next few years.
In addition to the U.S., China has also made a large financial investment into subsidizing the semiconductor industry to bolster its industry presence, and become more production independent.
There’s also a thought that subsidizing the semiconductor industry could lead to larger problems in the future. The U.S. has tried subsidizing the industry before, back in 1979. City-Journal.org states:
“Back in 1979, the United States was concerned that it was losing its semiconductor edge to Japan, which had an industrial policy favoring the industry. In response, the federal government set up and funded the Very High-Speed Integrated Circuits Program (VHSIC). Over a decade, it produced nothing. In 1987, the Department of Defense tried again, helping to form SEMATECH, an Austin, Texas-based nonprofit with $500 million in both public and private funds. Though occasionally celebrated as a model, SEMATECH mainly funded research into memory chips which did not represent the future of the industry. A recent dissertation demonstrated that the U.S. military received “no tangible benefits” from the program, and that claims that SEMATECH rebirthed the industry “remain dubious.”
While the benefits of American and European efforts to increase chip production through government subsidizing are yet to be seen this time around, we should see whether or not these efforts will produce long-term positive results over the next five to ten years.