The Biden administration is providing $162 million to Microchip Technology to support the domestic production of computer chips — the second funding announcement tied to a 2022 law designed to revive U.S. semiconductor manufacturing.
The incentives include $90 million to improve a plant in Colorado Springs, Colorado, and $72 million to expand a factory in Gresham, Oregon, the Commerce Department said. The investments would enable Microchip Technology to triple its domestic production and reduce its dependence on foreign factories.
Much of the money would fund the making of microcontrollers, which are used by the military as well as in autos, household appliances and medical devices. Government officials said they expected the investments to create 700 construction and manufacturing jobs over the next decade.
Genuine question/curiosity: I can see you’re being downvoted, and I can tell that your post is sarcastic. But I’m not informed enough on this area to know what the sarcastic take is. What happened with the Russian Lada? This isn’t a part of history I know.
It’s a pretty big logical leap. The Lada was a fully Russian made car, from the joint collaboration of the U.S.S.R.'s trade dept and Fiat. It’s got a history of being cheap, and was often made fun of by Americans, but was pretty well received by it’s target audience of the Eastern Bloc for being easy to repair. The company is still around, but these days their market niche is pretty well satisfied by Asian manufacturers like Hyundai and Kia, so you don’t really hear about them.
To take that story and go to “All state-funded manufacturing is bad and awful” is where it becomes insane.
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I responded to the post above. I hope you take a moment to read it.
But as to Huawei, they’re not a government controlled organization nor were they chosen to be the winner by the government as much as the US would try to claim otherwise. Instead the Chinese government shotgunned hundreds of billions of dollars to the entirety of the chip industry. And here’s the most important part, thousands of chip companies collapsed last year in China. Those that could compete in the free market survived, those that didn’t went under. Huawei was one that survived, but stands upon the corpses of thousands of companies.
Even with outcomes as positive as they have been for the whole of the Chinese chip market, there was incredible equity loss to accomplish this. That said, for China, better to have done this and lost hundreds of billions and catch up, than it was to languish against the US.
So, it’s in my opinion that 1. the 50 billion the US is putting into this is way too small and 2. it’s clear now that Biden is picking winners and losers. If you read my previous post you’ll understand why this is incredibly bad and concerning.
I’m glad you asked. The Soviet Union was famous for industrial policy. Or the government controlling what gets created and produced. It’s basically the reason why we say free markets are better and that we can’t use industrial policy to catch up.
The original Lada was famous for being the prime example of this. While western nations were driving highly advanced cars, the Lada was incredibly primitive. It didn’t have airbags, or anti-lock breaking or any safety features. Basically they were rolling death traps. Btw, Iranian cars are basically at this state and are also created with government control. The reason is, industrial policy doesn’t focus on what’s good for the market, but the demands of politicians. They saw the Lada could drive and that’s good enough and didn’t invest more into it since there were too many other demands. This happened to basically all soviet industries causing them to fall far far behind.
But the Lada is just an example. There are many other examples like the Russian Aerospace industry, or the Japanese Aerospace industry, or India’s chip fabs.
Now, that isn’t to say I disagreed with the chip act initially. China’s proven you can stimulate markets as long as you don’t get involved in the actual production. Basically China had a big chip fund and spread it across both large and small organizations, but most importantly allowing those who couldn’t compete to go bankrupt. That’s why there were so many reports about over 1,000 chip companies bankrupting in China last year. But it also produced Huawei’s new chip. You can’t pick winners and losers, you need to let the market decide. Which I thought initially what Biden would do. I also knew 50 billion wouldn’t be enough, but I thought it would be a start. Instead, we’re seeing Biden pick winners and losers. This will lead to bad outcomes.
Russian Lada was a “people’s car” that (like other Soviet products) was built for internal use and protected from competition. When the Soviet Union fell and Russian car manufacturers were exposed to competition, they eventually went out of business.
The story is not that simple though. The Lada was a really popular and robust car. It lived on for a long time and exported versions to Canada and other places using Western fuel-injected engines. I have no idea what happened to the company in the end but it seems clear at least to me that it was the sudden huge change in competitive landscape that did it in, not the industrial planning.
Škoda is a similar car brand from (at the time) Yugoslavia that managed to survive the fall of the Soviet Union and is still active as a brand today.
Still exist apparently https://en.m.wikipedia.org/wiki/Lada
This part:
IS caused by industrial policy. That’s the whole point. They can’t keep up with competitive landscapes because the policy made it good enough then they just stopped and since it’s protected there’s no reason to improve.
Yes, the initial version was popular, but industrial policy preventing it from advancing was it’s death.
You literally explained how industrial policy killed it and then said it wasn’t industrial policy.