The Senate has passed a $52 billion subsidy for U.S. semiconductor manufacturers. The bill gained bipartisan support because it simultaneously appeals to congressmen with protectionist views, misplaced national defense concerns and politicians bringing home the bacon for special interests.
In 1990, U.S. firms produced 37 percent of the worlds semiconductor chips. Today that share is down to 12 percent. But the decline in and of itself should not cause concern. Industries expand and contract all the time in a global economy. The range and quantity of goods with chips in them have expanded massively since 1990 while prices have fallen. These gains would not have been possible without increased foreign production.
Pandemic-related shocks have disrupted supply chains in many industries, including semiconductors. This may lead U.S. firms to source more from domestic chip producers in the future, but it doesnt require a government subsidy. The impact that supply-chain disruptions cause to firms bottom lines already incentivizes buying from domestic producers when the risks justify it.
This doesnt mean that competition in the global marketplace is fair to U.S. semiconductor producers. Its not. China, Japan, South Korea, Germany and India all subsidize their semiconductor producers in ways similar to the subsidies passed by the Senate. But the point of competition in the marketplace is to better serve consumersnot to be fair to producers.