The Confused Dream of US Chips

A global shortage of computer chips had stalled the manufacture of cars, computers and even dog washing machines. But there are now signs that the shortage of chips – the tiny parts that function like the brain or memory in all things electronic – is ending.

This may be good news for our budgets. It’s also a tricky time for the Biden administration and U.S. lawmakers who have pushed for taxpayers to fund computer chips with a host of goals, including alleviating shortages.

Some of these goals are reasonable. But throwing government money at solving chip shortages had seemed questionable. Now that looks like an error. Let’s talk about why:

Why are fleas important again?

Computer chips are needed for smartphones, video game consoles and other consumer electronics. We also use them in fighter jets; in car ignition, brake and entertainment systems; and to monitor the milk production of dairy cows.

As my colleague Don Clark explained last year, it’s not strange that fleas are temporarily depleted. What’s been unusual over the past two years has been the wild combination of pandemic-related disruptions and our overwhelming desire to buy more stuff, which has led to a variety of shortages.

What changed?

In recent weeks, computer chips have suddenly seemed to become abundant. Several computer chip companies have warned that their sales are go from hot to not. Unused tokens are accumulate in South Koreaa major, fastest-paced manufacturing hub in years.

One of the main reasons is that people around the world aren’t buying as many electronic devices like laptops, smartphones, and TVs as they did a year or two ago. Many people are worried about rising prices and the health of economies and are holding back. So companies are cutting orders for computer chips that would have been built into many products.

This is how the economy and computer chips tend to work. When people feel good and spend a lot, chip factories multiply to do a lot more. Almost always they overproduce and there are too many chips. Some experts said the pandemic mania would be followed by a flea outbreak. We’re not there yet, but we’ll see.

What does the Biden administration have to do with it?

I’ve written before about the consensus in Washington on increased US government support for US chip factories and expertise. Congress has debated — and is still arguing — over the details of spending more than $50 billion in taxpayer money to do this. Many of the world’s most advanced chips are made in Asia, including Taiwan and South Korea.

One of the stated goals of the funding is to help alleviate chip shortages. And now? Nothing happened and shortages are ending for some types of chips.

American taxpayers have good reason to subsidize the chip industry. Many experts cite the importance of gaining knowledge about advanced chip manufacturing in America. It’s not great that so many essential chips are made in Taiwan, within China’s potential sphere of influence. The US military wants to make sure it has an uninterrupted and controlled supply of it. (There are US chip factories dedicated to this.)

But the mission of the US chip plan is inconsistent. U.S. officials and industries have drawn up a long list of benefits from U.S. chip funding, including creating more U.S. jobs, the ability to compete with China, and making things easier for U.S. industries. like car manufacturers to continue producing their products.

The last one, honestly, never made much sense. The harsh truth is that cars have to fight for space on factory chip lines against more cost-effective chips for smartphones or other fancy gear. Even if more computer chips were made in America, there’s no reason why a chip made in Texas would only be used in Ford F-150s and not European or Asian corporate trucks.

The more rationales the government crams into its chip projects, the less clear it is about what America is trying to accomplish.

Learn more about On Tech on computer chips:

  • Twitter is suing the Indian government: The company opposes orders to remove certain tweets and block accounts that India says violate the country’s laws, my colleague Karan Deep Singh reported. It’s the latest standoff between an American internet company and the world’s largest democracy over the appropriate limits on free speech.

  • This may be one of the largest known personal data breaches in China. Hackers are offering for sale a Shanghai police database that may contain information on perhaps a billion Chinese citizens, my colleagues John Liu and Paul Mozur have reported.

  • When the Religious Pilgrimages website goes down: Saudi Arabia has directed Westerners to a single government-sanctioned website to book travel to the Islamic holy city of Mecca. The Washington Post reported that technical problems prevented thousands of people from making the Hajj. (Subscription may be required.)

Wow, it’s what does a tiny turkey look like.

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