The CHIPS Act Alone Won’t Win the U.S.-China Tech War

The CHIPS Act Alone Won’t Win the U.S.-China Tech War
A visitor to the 21st China Beijing International High-tech Expo looks at a computer chip through a microscope, Beijing, China, May 17, 2018 (AP photo by Ng Han Guan).

On Aug. 9, U.S. President Joe Biden helped bolster the United States’ technological lead over China by signing what is commonly referred to as the CHIPS Act—formally known as the Creating Helpful Incentives to Produce Semiconductors for America and Science Act. The bill passed Congress with extensive bipartisan support and was quickly hailed as a defining legislative achievement. The White House, for instance, gushed that it would “poise U.S. workers, communities, and businesses to win the race for the 21st century” and “keep the United States the leader in the industries of tomorrow.”

The act’s main focus is on enhancing the United States’ technological competitiveness, a priority that has been building for several years, particularly around the manufacturing of semiconductor chips. Semiconductors are critical components in modern electronics and are widely seen as fundamental to modern economies. Both the U.S. and China depend largely on foreign countries, especially Taiwan, for advanced semiconductors, but both have been striving for years to develop better home-grown semiconductor manufacturing capacity. While the act itself does not mention this intensifying area of competition with China, its champions, including Biden himself, have repeatedly referred to the need for Washington to invest more in science, technology and innovation in order to keep pace with Beijing’s own efforts to leapfrog ahead in the development of advanced technologies.

But will the CHIPS Act succeed in doing so? Despite the hype, the history of other nations’ efforts to develop advanced technology—and China’s, in particular—shows that governments’ best-laid plans often falter amid bureaucracy, inefficiency and an over-reliance on state control and direction of technological innovation. Though identified as the United States’ pace-setting challenger, China’s progress in science, technology and innovation, or STI, while substantial, is less impressive than it first appears, despite its size, scale and long history.

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