(C) Common Dreams
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The CHIPS Act Is a Massive Giveaway to Tech Companies [1]

['Doug Henwood', 'David Broder', 'Alexander Zaitchik', 'Alex N. Press', 'Julia Rock', 'Andrew Perez', 'David Sirota']

Date: 2023-11

Semiconductor firms are about to get showered with cash thanks to a new bill, the CHIPS and Science Act of 2022 — CHIPS standing for, cleverly, the Creating Helpful Incentives to Produce Semiconductors Act. Because it involved free money for capitalists, seventeen Republicans (out of fifty) voted for it despite their habit of voting against almost anything supported by Democrats except money for the Pentagon. Joe Biden signed it on Tuesday, August 9. It’s a $280 billion package designed to encourage semiconductor manufacturing and research in the United States. Pundits and generals have watched with increasing alarm as chip-making moved from an industry dominated by the United States, and to a lesser extent Western Europe, to a heavily Asian affair, meaning Taiwan, South Korea, and China (the big threat lurking behind all the worry, of course). The COVID crisis highlighted how dependent US and European producers — carmakers, computer companies, appliance manufacturers — have become on Asian chipmakers. The CHIPS Act is supposed to address all that, bringing the industry back home and restoring Silicon Valley to its rightful place of global dominance. But that’s not all. When she wasn’t stoking war with China (which would require plenty of advanced chips, presumably sourced from countries other than China), Nancy Pelosi took time out to say that the CHIPS Act would create “nearly 100,000 good-paying, union jobs.” One is skeptical.

Provisions Among its provisions is $53 billion in subsidies to the US chip industry to encourage domestic R&D. Of that, $39 billion is a direct subsidy, and the rest is for “workforce development” and speeding up the “lab to fab” pipeline. The bill also includes large tax write-offs for companies that expand chip facilities in the United States, which would theoretically close the cost gap between building here and abroad. Aid won’t be confined to American firms; industry leader Taiwan Semiconductor Manufacturing Co (TSMC) will be eligible as long as they do the work here. The Biden administration is touting a plant Intel is building in Ohio — he even devoted 147 words to it in his State of the Union address — as proof of the CHIPS Act’s powers, but Intel has been playing politics with the project. In June, impatient with congressional dithering on the bill, it canceled a formal groundbreaking ceremony, emphasizing that it’s building plants in countries that have gotten their subsidy act together. (Mercifully, the EU has its own Chips Act.) Intel also said its long-term plans for the site would depend on the continuing flow of free federal cash. (TSMC said its investment plans also depended on the adoption of the bill.) On its passage, ​Intel CEO Pat Gelsinger said, “I’m excited to put shovels in the ground as Intel moves full speed ahead to start building in Ohio,” though I suspect Gelsinger himself won’t be operating any shovels. Intel may be happy, but just last month, some smaller firms were complaining that it and the other giants would get all the money and they’d be frozen out. About $200 billion will be also devoted to basic research in computing, robotics, and semiconductors through the National Science Foundation and other federal agencies. Universities getting grants under the program would be prohibited from participating in educational partnerships with the Chinese government known as Confucius Institutes. These have been under relentless attack for nearly a decade as the anti-China campaign ramps up. Worries have been raised about the return of “industrial policy,” pronounced dead in the 1980s (though the Reagan administration did craft a giant aid package for the chip industry known as SEMATECH). Rather than the return of industrial policy, what’s actually distressing is watching public money go into private coffers with so little coming in return. The CHIPS Act bars its beneficiaries from using the money to do stock buybacks or pay dividends, though it’s not clear how one set of a few billion dollars can be distinguished from another. It would also deny money to firms expanding in China and other countries deemed unfriendly. Economic warfare is ramping up.

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[1] Url: https://jacobin.com/2022/08/chips-act-biden-semiconductors-intel-nvidia-stock-buybacks

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