Despite a flurry of action in the political sphere this summer, legislatively, the U.S. has stayed fairly quiet up until recently. The Inflation Reduction Act passed by both the House and Senate in early August marks a major stride forward for the Biden Administration along with another important bill, the CHIPS and Science Act. This act focuses on two different components, widening American-based industry as well as expanding funding for scientific exploration. The act centers itself on the production of semiconductor chips, a vital product within a highly technological society, powering products from lightbulbs to highly advanced computers. In the last few years, other nations, particularly China, have amped up their manufacturing of that product, putting pressure on the U.S. to act. As the bill begins to make its mark on American industry, many question how this tension between chip-producing countries might impact the international community.
Within the country itself, American politicians and scholars differ on their opinions on the act. The bill would pour billions of dollars in taxpayer money into the private sector which many view as overreaching government control. Others warn of the paying out of taxpayer money to major corporations who could exploit it for their own purposes. House Minority Leader Kevin McCarthy criticized the bill as a “blank check” to the semiconductor chip industry. Responses to the bill often attack the trust placed in corporations to use taxpayer money wisely. Others argue that some guardrails do exist such as the U.S. government’s ability to retract money from companies that they believe have broken stated rules.
Still, many defend the bill as a bulwark for American industry. As a large proportion of these semiconductor chips are manufactured in other countries, the U.S. fears what might happen if those major supplies were cut off in the event of war or political tensions. In an interview with NPR, Sourabh Gupta, senior Asia-Pacific policy specialist at the Institute for China-America Studies, expressed confidence that the bill will be substantial enough to combat these fears. He described the structuring of the bill as “frontloaded”, meaning that a substantial amount of money is being quickly dispersed after the bill’s signing. With these funds, some believe that companies can produce chips fast enough that manufacturing can outpace potential heightened tensions such as a war between China and Taiwan, that would cut off supply.
Within East Asia, the bill’s approach to becoming more competitive in the chip industry has elicited some differing reactions. Notably, the Chinese commerce ministry shared a strongly negative response to the new law, calling it similar to a “Cold War mentality.” This response indicates that China views the actions of the United States as similar to the aggressive tension created between the U.S. and Russia during the Cold War. Depicting the firm stance of the U.S. against Chinese manufacturing, the new act lays out that federally funded chip manufacturers must not make new investments into Chinese technology for at least the next decade.
The neighboring Taiwan has expressed a positive outlook on the bill, confident in their ability to withstand as a steady contender within the field. Currently, Taiwan produces nearly 92% of the most advanced semiconductor chips, a mighty power within the industry. Even though Taiwan maintains an upper hand in this field, both the U.S. and Taiwan seem interested in securing peaceful relationships with one another. TSMC, the largest producer of semiconductor chips in Taiwan, plans to build a chip production facility in Arizona which is expected to be supported by subsidies from the bill, representing a friendly link between the two countries.
Ongoing hostile relations between Taiwan and China have only been exacerbated by the new act. Even though the island has ruled itself independently for many decades, the Chinese government continues to view the island as part of its territory. China has expressed some indignation at the attempts of American policy makers to extend a friendly hand towards Taiwan. Notably, China viewed Speaker Nancy Pelosi’s visit to Taiwan in early August as a betrayal by the U.S. Currently, China considers an attack on Taiwan, to bring the island back under the country’s control. The CHIPS act may add fuel to this fire by definitively showing China that the U.S. no longer represents a friendly ally and may provide necessary aid to Taiwan in the event of a war.
It still remains to be seen what impact of the CHIPS and Science Act might have on potential conflict in Asia. For now, the bill signals the possible gain of a competitive edge for the U.S. in the semiconductor chip industry and an expansion of scientific exploration and innovation. Americans will soon see how the bill might affect their lives as well as the lives of others around the world.
Sources:
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Photos:
https://www.reuters.com/technology/car-chip-shortage-abate-smartphones-could-be-next-industry-execs-2021-07-23/
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