Introduction: The author of this article opposes the implementation of the chip industry policy of the United States, believing that "the issuance of subsidies always prioritizes the interests of politicians." The resources have been tilted towards swing states, reflecting the in

Introduction: The author of this article opposes the implementation of the chip industry policy of the United States, believing that "the issuance of subsidies always prioritizes the interests of politicians." The resources have been tilted towards swing states , reflecting the interference of the US political system on industrial development.

[Text/Andy Kosler Translated/Observer Network By Guanqun]

Biden President last week signed the Chip and Science Act with a total value of $280 billion to subsidize domestic semiconductor production and alleviate the chip shortage situation. This is really a big mistake. Before this, in order to retaliate against Speaker Nancy Pelosi's visit to Taiwan, mainland China has banned the export of natural sand to Taiwan. Natural sand!

semiconductor would never be short of it. After melting the sand and cutting it into thin wafers, you can make semiconductor chip . shortage? Go to the beach and check it out to see if there will be a shortage of chips. Although the chip shortage problem has almost been solved this time, the chip shortage still exists.

You can't just spend money to solve this problem. Yes, to process these wafers, chip companies will spend billions of dollars to build processing plants (or wafer fabs) and buy expensive ultra-precision machines that may remain advanced for five years. Chip companies should continue to invest in lithography, injection, annealing, sputtering and polishing and continuously improve processes to increase production. In the process of manufacturing semiconductors, a microscope penetrates into a city like a meteor crashing into a city. A single dust can ruin a few months of work.

Intel founder Andy Grove once told me a story about someone accidentally splashing ink into a distilled water pipeline at a fab. The engineers were frightened, but strangely, the output actually increased. Making chips is more about art than science. Chip manufacturing is not just about sand and capital, but also about the mind.

President Biden signed the Chip Act

I once visited a fab in Dayton, Ohio, where General Motors decided to produce its own chips. What shocked General Motors was that the factory could not produce any available chips. No chip can be made. Finally, I discovered that the pliers used by factory employees to clamp the wafers are constantly causing pollution.

In the early 1990s, I met in Taipei, the founder of the new chip foundry company TSMC. He proudly showed me their company's sealed wafer vehicle, and they no longer used pliers. This is the real starting point for TSMC to make its fortune.

Then, a "chip foundry" model appeared. Many companies can design chips in California , make chips in Taiwan, and then assemble chips in the Philippines or Indonesia without having to own their own wafer fabs. Of course, those who own expensive manufacturing facilities protested. AMD founder Jerry Sanders declares that "real men have their own wafer fabs." Today, however, AMD no longer has fabs—its processors are made by TSMC, and AMD's market value has surpassed Intel. Magic enough.

Intel made a big profit after launching the "Pentium" processor, thus building the most advanced wafer fab with investments far exceeding its competitors, but ultimately stability overwhelms innovation. Intel has the ability to make a wafer factory run, and then "accurately copy" the new factory through the same coin. In order to create chips with smaller processes, Intel studied the new extreme ultraviolet lithography technology from Asmer, the Dutch equipment manufacturing company, but believes that this technology is too expensive and risky to use. TSMC has been successful with extreme UV lithography, which is especially suitable for manufacturing low-power chips required for mobile devices. Currently, TSMC has more available funds than any company when it comes to building fabs.

With the Chip+ Act providing chip manufacturers with a full $52 billion in subsidies and tax credits, Congress declared that "a real country has its own wafer fab." The bill also allocates $1 billion to remove carbon – which is strange because the chips are made of silicon.What's worse is that just after Intel ranked TSMC and and Samsung , the United States rewarded Intel, which just announced its huge losses in the third quarter.

There is no free lunch in the world. Even the Minister of Commerce Gina Raymondo admits that there are “many additional conditions” in the 1054-page bill. Brian Dees, director of the National Economic Commission, agreed with the "directive-controlled" industrial policy: "The question should go from 'Why should we implement industrial policy?' to 'How should we implement an industrial policy successfully?'" This idea is just as wrong as the Soviet five-year plan. Industrial policies will eventually lead to disasters. Japan Ministry of Economy, Trade and Industry micromanagement of the domestic semiconductor industry, but ultimately caused the decline of the industry. Today, no Japanese semiconductor company is in the top ten in the world.

Yes, in order to avoid variables in Taiwan's chip supply, we must be able to manufacture advanced chips in the country. But issuing subsidies is a wrong approach. The issuance of subsidies always prioritizes the interests of politicians over how they benefit the economy. Government funds often end up flowing to those voters’ swing states. Look, Intel is building its own new wafer fabs in swing states such as Ohio and Arizona . As for subsidies, Elon Musk said at the Wall Street Journal Executive Council (yes, hypocritically): "Take them all."

What the United States should really do is to let suppliers order large amounts of chips for military, intelligence agencies and other units. They can even place orders on advance payment. Silicon Valley was initially established because the United States ordered a large number of transistors to build intercontinental missiles and implement space plans. After discussing it carefully, perhaps Apple and Google will also order domestic processors and machine learning chips in advance.

Don't let political lobbyists decide on fund allocation, because Wall Street always sees subsidies as a huge negative factor, which can lead to lower valuations of companies receiving subsidies and rising private investment costs. Last week I noticed that the Magic Bean , which has caused the super bull market to rise for 40 years, is a chip. This magic bean cannot be eaten every day like the pork fried lentil . But we make this mistake again and again, and stop "accurately copying" the same bad policy.

( Observer.com is translated by Guanqun from the US " Wall Street Journal ")

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