CD259: CHIPS: A State Subsidization of Industry

A new law, known as the CHIPS Act, provides over $50 billion to existing, profitable companies to fund new semiconductor production facilities in the United States. In this episode, we examine why Congress decided to gift these companies our tax money now and explore the geopolitical implications of this funding decision. Beyond semiconductors, the law provides further corporate welfare for the creation of things that many of us tax payers likely support. This law is complicated; let's get nuanced.

Episode Transcript

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View the show notes on our website at https://www.congressionaldish.com/cd259-chips-a-state-subsidization-of-industry

Background Sources

Recommended Congressional Dish Episodes

CD230: Pacific Deterrence Initiative

CD218: Minerals are the New Oil

CD215: COVID-19 Testimony

CD205: Nuclear Waste Storage

CD187: Combating China

CD186: National Endowment for Democracy

CD128: Crisis in Puerto Rico

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Semiconductor Industry

“Pass the CHIPS Act of 2022 Fact Sheet.” July 2022. Semiconductor Industry Association.

“Global Semiconductor Incentives.” February 2022. Semiconductor Industry Association.

“2021 State of the U.S. Semiconductor Industry.” September 2021. Semiconductor Industry Association.

Taiwan

Bansari Mayur Kamdar and Medha Singh. Aug 2, 2022. “Chip stocks slip as Taiwan tensions mount.” Reuters.

Karen M. Sutter. Mar 7, 2022. “U.S.-Taiwan Trade Relations” [IF10256]. Congressional Research Service.

Yimou Lee, Norihiko Shirouzu and David Lague. Dec 27, 2021. “T-DAY: The Battle for Taiwan.” Reuters.

PRISM Program

Derek B. Johnson. Aug 27, 2018. “Court case puts PRISM back in the spotlight.” FCW.

Wealthy Shareholders

Juliana Kaplan and Andy Kiersz. Oct 19, 2021. “The wealthiest Americans now own almost all of the stock market — 89% to be exact.” Insider.

National Endowment for Democracy

“Board of Directors.” National Endowment for Democracy.

National Science Foundation Directorate

Mitch Ambrose. Mar 17, 2022. “NSF Stands Up Directorate for Technology, Innovation, and Partnerships.” American Institute of Physics.

“Chairwoman Johnson and Ranking Member Lucas Welcome NSF Director Panchanathan’s Announcement of New Directorate Aligned with Bipartisan Committee Proposal.” Mar 17, 2022. House Committee on Science, Space, and Technology.

Fusion Research

“Nuclear Fission and Fusion.” Diffen.

“Client Profile: Commonwealth Fusion Systems: Summary.” Open Secrets.

“Client Profile: Commonwealth Fusion Systems: Lobbyists.” Open Secrets.

“Barton Gordon: Partner. K&L Gates.

American Exception Book

Aaron Good. 2022. American Exception: Empire and the Deep State. Skyhorse Publishing.

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The Law

H.R. 4346: CHIPS Act of 2022 / Research and Development, Competition, and Innovation Act / Supreme Court Security Funding Act of 2022

GovTrack Overview

Congressional Budget Office: Estimated Budgetary Effects of H.R. 4346

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Bills Later Added to the CHIPS Act

S. 3740: Micro Act of 2022

• The one hearing

H.R. 4863: Partnerships for Energy Security and Innovation Act

S. 1359: Partnerships for Energy Security and Innovation Act of 2021

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Audio Sources

President Biden on Taiwan

Sept 18, 2022
60 Minutes

Scott Pelley: What should Chinese President Xi know about your commitment to Taiwan? President Joe Biden: We agree with what we signed on to a long time ago, that there's a One China policy and Taiwan makes their own judgments about their independence. We are not moving, we're not encouraging their being independent. That's their decision. Scott Pelley: But would US forces defend the island? President Joe Biden: Yes, if in fact, there was an unprecedented attack. Scott Pelley: [overdub] After our interview, a White House official told us US policy has not changed. Officially, the US will not say whether American forces would defend Taiwan. But the Commander in Chief had a view of his own. [interview] So unlike Ukraine, to be clear, sir, US forces, US men and women would defend Taiwan in the event of a Chinese invasion? President Joe Biden: Yes.

Senator Bernie Sanders’ Senate Session Speech

Jul 27, 2022

Jen’s Highlighted PDF

The Future of U.S. Policy on Taiwan

Dec 8, 2021
Senate Committee on Foreign Affairs

30:45 Sen. James Risch (R-ID): A unilateral change in the status quo regarding Taiwan would not only threaten the security and liberty of 23 million Taiwanese, but also significantly damage vital US interests and alliances in the Indo Pacific. We would lose a model of democracy at a time of creeping authoritarianism. It would give China a platform in the first island chain to dominate the Western Pacific and threaten, indeed, US homeland. The consequences for Japan security, and therefore, the US-Japan alliance, are hard to overstate. Semiconductor supply chains would fall into China's hands, and it would emboldened China in other territorial disputes, including with India, and in the South China Sea.

Fostering a New Era of Fusion Energy Research and Technology Development

November 17, 2021
House Committee on Science, Space, and Technology, Subcommittee on Energy

Witnesses:
Dr. Troy Carter, Director, Plasma Science and Technology Institute, University of California, Los Angeles and Chair, Fusion Energy Sciences Advisory Committee Long Range Planning Subcommittee
Dr. Tammy Ma, Program Element Leader for High Energy Density Science, Lawrence Livermore National Laboratory
Dr. Robert Mumgaard, CEO, Commonwealth Fusion Systems
Dr. Kathryn McCarthy, Director, U.S. ITER Project Office
Dr. Steven Cowley, Director, Princeton Plasma Physics Laboratory

Clips

Robert Mumgaard: However, from where I sit, I see three reasons why I'm very optimistic the US can create a definitive lead in this new industry. First, the growth of the private sector. Over $2.4 billion in private capital has been invested in the fusion companies that now number nearly 30. This is a similar amount of capital as in all the nuclear fission small modular reactor companies. This is coming from a large range of investors across venture capitalists, to university endowments, to large energy companies. And they're putting capital at risk in fusion because they understand that the world needs a fundamentally new source of clean energy if we are going to meet our decarbonization goals. And these companies are highly ambitious, with a recent survey stating that 84% of them believe that fusion will be on the grid in the 2030s or earlier.

Robert Mumgaard: We will proceed with the commercialization of our first fusion pilot plant called ARC. We hope to have that online in the early 2030s.

Robert Mumgaard: The second reason I'm optimistic is that the public program has produced a consensus plan. Detailed in the National Academies and FESAC (Fusion Energy Sciences Advisory Committee) Recommendations is a transition of the public funded program towards the US developing commercial energy. We need to stop some activities and transition to others. But the researchers are enthusiastic and they are ready. We have a new generation of leaders at national laboratories and universities hungry to develop that technology. And that plan has been authorized but has not yet been implemented.

Robert Mumgaard: And we're not alone. The other companies like TAE and General Fusion, Helion, Tokamak Energy, are looking at similar timeframes and experiencing similar growth. All these companies are looking to see which governments are going to be the best partners. And unfortunately, we are already seeing defections, with a major facility that could have been built in the US, instead being built in the UK. It'd be much better if the US public program leveraged the private sector, aligning with the technical goals and timelines to keep it happening here.

Robert Mumgaard: The third reason I'm hopeful is the movement towards public private partnerships and we know that when the public and private sectors work together and recognize what each side is good at, we create vibrant ecosystems. We saw this in commercial space, with NASA and SpaceX. We saw it even more recently with the COVID-19 vaccine

Supply Chain Integrity

October 1, 2020
Senate Committee on Armed Services, Subcommittee on Readiness and Management Support

Watch on CSPAN

Witness: Ellen M. Lord, Under Secretary of Defense for Acquisition and Sustainment

1:22:10 Ellen Lord: I believe there may well be a lot of this, frankly: not continuing to engage with these Chinese companies on sensitive issues, but in turn, developing industrial bases here that makes us not reliant on that back and forth. There's quite a bit of discussion within the inner agency right now about constraining Chinese involvement from everything from investments to specific commodities. But again, I think one of the areas where we could have the most impact on China broadly, is reshoring microelectronics. And right now, my team is working very closely across DOD, as well as the inner agency to come up with a very specific recommendation for some public-private partnerships in order to develop the capability here domestically. We at DOD are only about 1% of the overall microelectronics market, however, we have some critical needs.

Attorney General Barr’s Remarks on China Policy at the Gerald R. Ford Presidential Museum

July 16, 2020

15:20 Attorney General Bill Barr: “Made in China 2025” is the latest iteration of the PRC’s state-led, mercantilist economic model. For American companies in the global marketplace, free and fair competition with China has long been a fantasy. To tilt the playing field to its advantage, China’s communist government has perfected a wide array of predatory and often unlawful tactics: currency manipulation, tariffs, quotas, state-led strategic investment and acquisitions, theft and forced transfer of intellectual property, state subsidies, dumping, cyberattacks, and industrial espionage.

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Cover Art

Design by Only Child Imaginations

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Music Presented in This Episode

Tired of Being Lied To by David Ippolito