Should Semiconductors Be the MacGuffin of Geopolitics?
No. Hell no. But the US is treating them that way.
I’ve worried for a while that semiconductors—which appear in everything from cruise missiles and jets to toaster ovens and televisions—were being fetishized.
If you’re in tech, and specifically the semiconductor industry, you might hear that national security think tankers are abuzz about semiconductors and be like, “great!” Except it’s not great at all.
Like politicians, the preponderance of policy people in the national security state have no real literacy in either technology or political economy. And the higher up you go in the pecking order, the more this is true.
Nevertheless, Washington started cohering around semiconductors in the Trump years as part of fretting about all things that might fit into a framework of “great-power competition.” Then came that object-hyping book, Chip War, fueling the zeitgeist further. Now we have the “best and the brightest” of the Bidenistas—my original tribe—looking to securitize the economy itself, rendering semiconductors into the MacGuffin of geopolitics.
But none of that is rational—it’s frothy thinking, chasing a one-percent doctrine-style logic of possibility. Semiconductors are attracting government investment like a tulip craze at the same time that control of them is being treated as more vital than a terrorist getting nuclear weapons.
And this whole “I don’t understand tech but semiconductors are crucial” mania is the context for the United States plowing some $200 billion into semiconductor manufacturing in the US.
The most important outlay within that bet is subsidies for Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest maker of semiconductors. TSMC has estimated it may spend up to $40 billion building a foundry in Arizona as part of Washington’s efforts to onshore semiconductor manufacturing, and plans on grabbing as much as $15 billion in US government subsidies to make it happen.
But, like all things Sino-US rivalry, this is not working out as planned.
So far, the semiconductor portion of the CHIPS and Science Act (where the subsidies come from) is looking like a bad deal for the American taxpayer. Neither is it wise from a Taipei strategy perspective. And it is proving to be one of the most expensive bids in a larger US wager to break up global economic structures and contain China’s technological growth—which is unwise.
Let me explain.