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The Jumbled Dream of U.S. Chips

The worldwide shortage of computer chips has stopped the manufacture of cars, computers and even dog washing machines. But now there are signs that the shortage of chips – the tiny components that function like the brain or memory of all electronics – is over.

Maybe this is a little good news for our budgets. It’s also a bad time for the Biden administration and U.S. lawmakers pushing for taxpayer funding for computer chips that serve multiple purposes, including alleviating shortfalls.

Some of those goals are reasonable. But throwing away government money to fix chip deficiencies seems questionable. Now that seems wrong. Let’s discuss why:

Why are chips important again?

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

As my colleague Don Clark explained last year, it’s no surprise that chips can be temporarily scarce. What has been unusual over the past two years has been the wild combination of pandemic -related disruptions and our increased desire to buy more things, which has led to a variety of shortcomings.

What has changed?

In recent weeks, computer chips have suddenly seemed to abound. Many computer chip companies are warning that their sales are going from hot to not. Unused chips are accumulating in South Korea, a major manufacturing hub, at the fastest rate in years.

One big reason is that people around the world don’t buy electronics like laptops, smartphones and TVs like a year or two ago. Many people are worried about rising prices and the health of economies and are holding back. That’s why companies are cutting orders for computer chips that could have been multiple products.

Such is the state of the economy and computer chips. When people feel good and spend a lot, chip factories revolt to do more. Almost always, they overproduce and have too many chips. Some experts say the pandemic mania will be followed by a chip bust. We’re not there yet, but let’s meet.

What has that got to do with the Biden administration?

I’ve written before about Washington’s consensus on putting more U.S. government support behind American chip factories and expertise. Congress is debating – and still debating – the details of spending more than $ 50 billion of taxpayer money to make it happen. Most of the world’s most advanced chips are made in Asia, especially in Taiwan and South Korea.

One of the stated funding goals is to help alleviate chip shortages. And now? Nothing has passed, and the shortcomings are over for some types of chips.

There are good reasons for U.S. taxpayers to subsidize the chip industry. Many experts have discussed the importance of building knowledge of advanced chip manufacturing in America. It is unfortunate that so many important chips are made in Taiwan, within the potential influence of China. The U.S. military wants to make sure it has an uninterrupted and scrutinized supply of it. (There are US chip factories dedicated to it.)

But the mission of America’s chip plan is not the same. U.S. officials and industry have put together a laundry list of benefits from U.S. chip funding, including creating more American jobs, that will enable China to compete and facilitate U.S. industries such as auto manufacturers to continue to improve their products.

The last one, really, doesn’t really make sense. The harsh reality is that cars have to fight for space on chip factory lines against more useful chips for smartphones or other fancy gadgets. Even if many computer chips are made in America, there is no reason that a chip made in Texas would only go to Ford F-150s and not trucks from European or Asian companies.

The more reasons the government points to in its plans for chips, it’s less clear what America is trying to accomplish.

Read more from On Tech on computer chips:

  • Twitter sued the Indian government: The company is arguing against orders to remove some tweets and block accounts in India that are said to be violating the country’s laws, my colleague Karan Deep Singh reported. This is the latest confrontation between an American internet company and the world’s largest democracy on appropriate boundaries of freedom of speech.

  • This may be one of the most known breaches of personal data in China. The hackers offered to sell the Shanghai police database containing information to perhaps a billion Chinese citizens, my colleagues John Liu and Paul Mozur reported.

  • If the website for religious visits fails: Saudi Arabia has sent Westerners to a government-authorized website to book a trip to the Islamic holy city of Mecca. The Washington Post reports that technical glitches have prevented thousands of people from performing the Hajj. (A subscription may be required.)

Wow, that’s it what a itsy-bitsy turkey looks like.

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