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Just as we were beginning to recover from the pandemic, a phantom emerged to terrorize us with what we stand to lose the most. United States technology has just gone into chaos, and now we have a shortage of a key component for the industry. Buying it? Only China would provide it, and we’d make him rich. The solution? Pay $70 billion and wait for things to work out.
The scarcity of this is comparable to the lack of water: pay attention to what is happening
The United States is facing a severe shortage of semiconductors, the tiny chips that power everything from smartphones to cars to advanced weapons systems. This shortage threatens to disrupt major industries and hamper US economic and technological competitiveness.
Semiconductors are integral components of virtually all modern technology. As demand for electronics has skyrocketed in recent years, especially during the pandemic, a global chip shortage has emerged. US automakers have been forced to halt production as chip supplies dried up.
The semiconductor supply chain has concentrated in Asia, especially Taiwan, leaving the US vulnerable. With critical infrastructure and industries in jeopardy, America’s technology leadership hanging in the balance, and national security concerns mounting, policymakers are searching urgently for solutions to the shortage.
United States technology is facing the semiconductors shortage
The US is currently facing a severe shortage of semiconductors, commonly known as computer chips. This shortage began in early 2020, sparked by the Covid-19 pandemic. When the pandemic hit, demand for laptops, PCs and other electronics skyrocketed as people worked and studied from home.
At the same time, automakers cut back chip orders as car sales plunged. Chip manufacturers shifted production capacity to consumer electronics, leaving the automotive industry with a chip shortage when demand rebounded, as it was later confirmed by the Department of Energy.
The chip shortage has rippled through industries from autos to consumer electronics to medical devices. Automakers have been hit the hardest – they’ve had to halt production at times due to lack of chips. Major companies like GM, Ford and Tesla have lost billions in sales.
Nearly two years on, the shortage shows no signs of abating. Chip delivery times are still lengthy, inventories are depleted, and demand continues to outpace supply. Experts estimate the chip shortage will persist through 2023 and potentially longer. This poses a major economic risk to the US, as you may think.
$70 billion to end with this shortage: the solution proposed by the White House
In response to the ongoing chip shortage and concerns over reliance on overseas semiconductor manufacturing, the US government passed the CHIPS and Science Act in 2022. This legislation provides $52 billion in subsidies and incentives aimed at boosting domestic chip production and research here in the United States.
The CHIPS Act represents a major initiative by the Biden administration and lawmakers from both parties to strengthen American semiconductor leadership. The bill allocates funding for semiconductor manufacturing, R&D, and talent development.
This includes $39 billion in manufacturing incentives in the form of grants and tax credits to enable new advanced chip fabrication plants in the US. Another $11 billion is designated for federal semiconductor research and workforce development programs.
Supporters argue the subsidies are necessary for the US to compete with massive government incentives offered in Asian countries like China, Taiwan, and South Korea – which currently dominate advanced chip manufacturing. The goal is for these funds to incentivize companies to build cutting-edge foundries in America.
As you can see, the lack of chips and semiconductors is a growing problem that has United States technology reeling. The truth is that the consequences are still unpredictable, although this shock measure taken by the White House could change things. In any case, brands such as Tesla and tycoons like Elon Musk are already looking fearfully towards China, and they are not without reason.
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