Staying a step ahead of China is a recurring theme in U.S. foreign policy. Yet the most expansive effort on the table right now to keep China in check sadly emulates the communist country's greatest weakness: the blurred line between where the state stops and the market begins. Congress is set to get the government deeply involved in the critical market of semiconductors.
In a 64-33 vote, the Senate passed the CHIPS Act on Wednesday and it will likely be signed into law by President Biden soon.* This law traces its roots back to a 2020 bill to provide $16 billion in research and development (R&D) funding for the semiconductor industry. Government R&D funding is often wasteful, but such an amount for this purpose is not unheard of.
