The problem with the Biden Administration’s $76 billion CHIPS Act is that the Federal Government is expert at creating damage and waste. So, what may go wrong with the CHIPS act?
Price inflation. Those Trillions of Dollars of COVID stimulus checks were the very cause of price inflation. Any time a Central Bank prints money, price inflation is the result. Price inflation is what we have had in abundance. That resultant price inflation more than offset any short-term economic “benefit” from stimulus checks. The CHIPS Act would cause immediate inflation as any Government money that would be “invested” in the Chips industry would require the printing of new Dollars, thereby devaluing Dollars in circulation and causing price inflation.
Waste. How much of the $76 billion will actually be allocated to chip research & development and production versus non-productive actions such as lobbying and litigation to box out competitors?
Why is it that private industry can’t operate effectively without Government assistance?
How will the Government insert itself into the chip industry? How many Board seats will the Biden Administration acquire?
How many new Government rules will chip companies have to comply with in exchange for taking Government money?
How much operating efficiency and innovation will be sapped from the chip industry as Administrative officials stick their collective noses into every chip company’s day-to-day operations? Think of the Auto Industry from 2009 onward under the Obama Administration – is it really better off? Was it fun and fruitful having Government officials sitting on the Board and in meetings?
How about the Solar Industry post investment by the Obama Administration? It did not thrive, it crashed and burned after billions of dollars were wasted.
Cypress Semiconductor co-founder and former CEO T.J. Rodgers has an interesting perspective on Government subsidies to the Chip Industry. You may watch him speak about it in the YouTube video clip below.