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Will the $280 billion "Chip Plus" bill passed by the US Senate aggravate the competitive threat of Chinese chips?

Update time : 2022-07-30 10:41:01

On July 28, the US House of Representatives passed the $280 billion "Chip and Science Act" with 243 votes in favor and 187 against. The next step will be for the bill to be signed by President Biden to formally legislate.
According to media reports, the 1,054-page bill mainly covers two important parts: one is to provide $52.7 billion in financial support to the semiconductor industry, encourage companies to develop and manufacture chips in the United States, and provide these companies with a 25% investment tax credits; in addition, the bill would authorize approximately $200 billion in funding for scientific and technological research over the next few years, covering artificial intelligence, robotics, quantum computing, battery technology, biotechnology, and many others that are critical to future competitiveness field.

The bill aims to reduce the United States' reliance on computer chips made in China and other countries and fund scientific and technological research to maintain American industry competitive with foreign companies. But in fact, the essence of the so-called chip bill is to use a large number of financial subsidies and tax relief to increase the domestic chip manufacturing capacity of the United States, while trying to limit the development of China's chip manufacturing industry, but such non-market behavior is bound to destroy the existing global chip industry chain, and is likely to lead to global overcapacity of chips (especially advanced process chips).
In general, the impact of the bill on China's semiconductor industry will not be obvious in a short period of time. However, semiconductors are a technology-intensive industry with global cooperation and division of labor. China is a major semiconductor manufacturing country in the world. The practice of the United States has artificially destroyed the industrial chain, which will inevitably have a negative impact on the recovery of the global economy after the epidemic.

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