What the CHIPS Act Means for Your Devices and US Technology Manufacturing

If you take stock of all the high-tech devices around you right now, including the device you’re currently using to read this article, you’ll discover that they all need semiconductor chips to function.

And most of these chips are not made in the US.

The Biden administration wants to change that, with the president signing the CHIPS and Science Act this week. It will allocate more than $50 billion to bring semiconductor chip manufacturing to the US and away from its current production hub in East Asia.

Sourabh Gupta is a senior Asia-Pacific policy specialist at the Institute for China-America Studies, joining all things considered to discuss what this means for our devices and what it could predict about the future of American tech manufacturing.

This interview has been edited for length and clarity.

Interview Highlights

On what would happen if the US lost access to its semi-conductor chip imports from Asia

Life would stop if we didn’t have the chips, which is like oil: it’s the resource that runs our electronics and, in fact, runs our lives in many ways. A car has hundreds of chips. And we are not talking about the most sophisticated cars. We are not talking about electric vehicles. We are talking about your average car.

We are only talking about televisions, something as simple as that. Gambling kids aren’t going to get much of their entertainment if the chips don’t arrive. What chips also do is provide the foundation for a lot of innovation, next generation innovation, what has been called the fourth industrial revolution.

On whether the CHIPS Act goes far enough to prevent that potential slowdown

It’s enough. There is a lot of money out there, and a lot of it is doled out upfront: literally $19 billion over the next 12 months to support US chip manufacturing. But we don’t need to have all the chips or a very significant amount of chips made in the United States

We just need a certain amount of chips that won’t keep the US in blackmail or in danger if there’s a war in East Asia, or if there are other general problems in the supply chain.

On whether this law effectively strengthens the US position and curbs China’s influence in chip manufacturing

absolutely does [shore up the U.S.’s position], but it does not necessarily curb China’s influence. It forces China to be able to generate more indigenous innovation to catch up with the US, and its East Asian peers, in terms of chip manufacturing.

East Asian manufacturers are conflicted over the CHIPS Act and having certain disciplines imposed on them in terms of capacity expansion in China. But having said that, they value the importance of the United States. So the way they’re trying to proceed going forward is to ask the US federal government to allow them to continue to produce legacy chips in China, non-state-of-the-art chips, while they will produce the state-of-the-art chips at home. countries and in the United States so that the technology that is used in the latest generation chips does not leak into China and improves China’s productive capacities in some way.

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