america's chip subsidies boost semiconductor industry
New York, Friday, 10 January 2025.
The U.S. government’s substantial subsidies for the semiconductor industry are beginning to show significant results. This initiative, spearheaded during Joe Biden’s presidency, has allocated nearly $40 billion to chipmakers within a year. The aim is to enhance the competitiveness of major companies like Nvidia, positively influencing their market value. As the Biden administration winds down, the Department of Commerce is expediting funding agreements with semiconductor firms before Donald Trump assumes office. This strategic push represents one of the most considerable governmental bets on industrial policy in recent history, potentially marking a lasting economic legacy for Biden. While Trump will not reverse these subsidies, it remains uncertain how he will approach reinforcing them. The impact of these policies is being closely watched, as they promise to reshape the competitive landscape within the global semiconductor market.
Race to finalize funding
The Department of Commerce is working at an unprecedented pace to finalize semiconductor funding contracts before the presidential transition [1]. Officials are allocating nearly $40 billion to chipmakers in what amounts to the largest industrial policy investment in recent decades [1]. This aggressive funding timeline reflects the administration’s commitment to securing America’s position in the global semiconductor market [1].
Export control measures
Alongside subsidies, the U.S. has implemented stringent export controls to protect its semiconductor interests. The Bureau of Industry and Security (BIS) recently announced tighter restrictions on advanced semiconductor exports [2]. Commerce Secretary Gina Raimondo has emphasized the strategic strengthening of BIS, making it ‘unprecedentedly stronger and more effective’ [2]. These measures have resulted in 136 Chinese enterprises being added to the BIS entity list [2].
International cooperation and competition
The U.S. strategy extends beyond domestic subsidies to include international partnerships. The government has been actively engaging with allies like the Netherlands and Japan to coordinate semiconductor export policies [2]. This multilateral approach aims to maintain Western technological advantages while managing competition with China [2]. The comprehensive strategy combines domestic investment with international cooperation [1][2].