CHIPS Won’t Help China

Opponents of the CHIPS Act, which provides more than $70 billion in funding for domestic semiconductor manufacturing, have spent the past two weeks cycling through weak critiques that persuaded no one—Republican support in the Senate increased between the initial procedural vote and final passage. Perhaps unsurprisingly then, as the bill moves on to the House, opponents are doubling down on their most incendiary argument, even if it’s one that bears no relationship to reality: CHIPS, they say, won’t help the U.S. outcompete China. It actually helps China.

A good illustration comes from Heritage president Kevin Roberts, who went on Fox Business to warn that the bill “subsidizes the construction of semiconductor factories in China.” He suggested legislators think about “going back home to my district next month having voted for something that uses my voters’ taxpayers money to go to the construction of factories in China.” One imagines the grassroots mailers may already be rolling off the presses.

This is the sort of untruth that should probably just be called a lie, if not for the possibility that critics may be genuinely confused. So, to be clear: CHIPS creates no incentives to build factories in China, and creates no authority to send taxpayer dollars toward such construction. Funding is clearly limited to projects in the United States. This may help explain why the leading architects of the Trump Administration’s China policy—Secretary of State Mike Pompeo, National Security Advisor Robert O’Brien, and U.S. Trade Representative Robert Lighthizer—all support the bill.