Xinhua News Agency, Washington, August 29th (International Observation) The US "Chip Act" harms others and harms itself, and will eventually bite itself.
Xinhua News Agency reporter Xiong Maoling
The United States recently officially launched the Chip and Science Act of 2022 (hereinafter referred to as the "Chip Act"), which aims to promote the "return" of chip manufacturing to the mainland through huge industrial subsidies and hegemonic provisions to curb competition. Many industry experts said that this bill will "weaponize" science and technology and economic and trade issues, disrupt the global semiconductor supply chain, and will eventually bite the United States itself.
Anti-tidal current and anti-law
With the continuous progress of economic globalization, the chip industry has established a cross-regional industrial chain and supply chain network around the world, forming an efficient operation pattern of mutual cooperation. Analysts generally believe that the United States concocted the "Chip Act" in an attempt to promote the return of chip manufacturing, which is an act against the trend of globalization and the law of industrial development.
According to the data released by the White House, the semiconductor production in the United States only accounts for about 10% of the world, and the output in East Asia accounts for 75% of the world. This means that there is a strong semiconductor industry cluster in East Asia.
Deloitte Consulting said in a report that in the field of chips, manufacturers naturally form highly concentrated production clusters, creating a strong "talent pool" and "skill pool".
Brad Martin, head of the supply chain security field of RAND Corporation in the United States, told Xinhua that the "Chip Act" could not solve the problems of labor development in the chip industry in the United States in a short time.
In addition to failing to revitalize related industries in the United States, the "Chip Act" has also impacted the existing supply chain system. Matt Langione, an analyst at Boston Consulting Group, pointed out that the bill will definitely lead to lower efficiency and more redundancy in the supply chain system.
In addition, the bill forces enterprises to "take sides": as long as they receive subsidies from the US government, they will not be allowed to expand the production capacity of advanced chips in China or any other economy for 10 years. Many semiconductor companies believe that similar regulations distort the global supply chain, undermine the global competitiveness of enterprises, and ultimately affect the technological progress and development of the United States.
This is the White House, which was filmed in Washington, D.C., on August 16th, 2022. Xinhua News Agency reporter Liu Jie photo
Increasing deficit pushes inflation.
The "Chip Act" violates the laws of the market and forcibly supports "Made in America" through huge industrial subsidies, which not only does not solve old problems, but creates new contradictions. Analysts pointed out that the profits of American semiconductor enterprises are already very high, and giving subsidies is equivalent to "robbing the poor to help the rich", which will intensify the risks of high deficit and high inflation.
The US Congressional Budget Office had previously estimated that the Chip Act would increase spending by $55 billion in ten years, and the industrial tax credit would reduce tax revenue by $24 billion, which together increased the fiscal deficit by $79 billion. Some budget monitoring agencies say that this will continue to push up inflation and drag down economic growth.
Desmond Rahman, an economist at the American Enterprise Institute, told reporters that the goal of the "Chip Act" is very long. When those investments used to encourage the development of the semiconductor industry bear fruit, the cost paid by ordinary Americans will only be higher.
Adam Brandon, director of the American Freedom Foundation, believes that the Chip Act is reckless fiscal expenditure, which will only "fuel the fire" for inflation and make American families bear the cost. He said that expanding the welfare of enterprises will not make the United States more competitive, but will only increase their dependence on the government.
This is a chip application exhibition shot at SK Hynix booth in the 4th China International Import Expo(CIIE) Technology and Equipment Exhibition Area on November 5th, 2021. Xinhua News Agency reporter Liang Xu photo
Frequency suppression is wrong and wrong.
Politicians who advocate the "chip bill" claim that the bill can reduce America’s dependence on foreign semiconductor products and solve the problem of chip shortage. Analysts said that the reason for the shortage of chips is that the United States unilaterally provoked economic and trade frictions and shook the global supply chain of semiconductors. The "Chip Act" is another mistake in the wrong way to solve the United States, and it is completely a political manipulation tool.
Chad Bowen, a former White House trade adviser and a senior researcher at the Peterson Institute for International Economics, an American think tank, said in an article that the United States cracked down on enterprises in other countries, which shook the global semiconductor supply chain and harmed the interests of American enterprises and workers. Related export controls also prevented manufacturers from investing in the United States.
The Boston Consulting Group estimates that if the United States completely prohibits semiconductor companies from selling products to customers in China, American semiconductor companies will lose 18% of the global market share and 37% of their revenue, and the semiconductor industry will also lose 15,000 to 40,000 high-skilled jobs.
From this point of view, this exclusive "chip bill" can not only help the American semiconductor industry, but also aggravate the distortion and mismatch of the global industrial chain and harm others.