US Debates Importance Of Chips Act; Its Repercussions On China

Commerce Secretary Gina Raimondo emphasized the importance of the U.S. Chips Act, citing the impracticality of the U.S.'s dependence on Taiwan for semiconductors, Bloomberg reports.

She mentioned the dependence on Taiwan for chips as untenable and unsafe at the annual Aspen Security Forum in Colorado, a gathering of White House officials and diplomats.

She said the U.S. needs to protect American intellectual property and defend U.S. companies from "unfair practices." 

The Chips Act could offer them respite from the Chinese dumping of cheap steel and aluminum into the U.S. while also trying to level the playing field for U.S. companies and help them better access the Chinese market, she added.

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"We need to be clear-minded about our export controls, deny China technology from the U.S. that will allow them an edge, and enforce that, and we are doing that," she said.

 "This is a Sputnik moment for America," Raimondo said, referring to the over $50 billion package to boost the manufacturing of American-made semiconductors.

The bill has been amid discussions for over a year and got held back due to Senate disagreements.

A bipartisan version of the bill is on track for votes next week in the House and Senate that could increase the U.S. budget deficits by $79 billion over a decade. A bipartisan bill subsidizing domestic semiconductor production garnered 64-34 votes.

Economist and former U.S. Treasury Secretary Lawrence Summers justified the Chips Act, citing geopolitical reasons at the Aspen Forum. He compared U.S. reliance on Taiwan to European dependence on Russian gas imports, which gave Moscow leverage following its invasion of Ukraine.

Robert Zoellick, the former U.S. Trade Representative and World Bank President, warned that U.S. policy on China had been "schizophrenic" as it shifted between punishing China and opening up to the world's second-largest economy.

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