Abstract: In August 2022, the US Biden administration introduced the CHIPS and Science Act, with a total scale of nearly $280 billion, sparking widespread discussion on the US new round of semiconductor industrial policies. Unlike previous measures that focused on supporting R&D and innovation, this round of US industrial policies for the semiconductor industry emphasizes providing large-scale subsidies for the manufacturing and investment of semiconductor companies, favoring physical fabrication facilities over R&D, as well as adopting protective provisions to curb the acquisition of advanced chips by China, Russia, and other countries.
Overall, the new round of industrial policies may bring some benefits such as reversing the decline in the US global share of semiconductor manufacturing, fostering innovation, and creating job opportunities, but its effects are limited. Moreover, the effects of promoting the semiconductor industrial chain security and consolidating the US leading position in semiconductor technology may be less than expected. Additionally, adopting large-scale subsidies may lead to rent-seeking and trade conflicts. Four insights can be drawn from past experience: first, the emphasis on subsidizing fabrication facilities diverges from successful experiences, and its effect remains to be seen; second, the pursuit of self-sufficiency in the semiconductor industry is an illusion; third, semiconductor industrial policy may incur high costs in job creation; fourth, driving the development of the semiconductor industry is not only a matter of splurging money, but also depends on nurturing and reserving talents, and whether existing industrial policies can address future talent shortages is questionable.
