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Columbia Energy Exchange cover image

America’s Energy Race Against China

Columbia Energy Exchange

NOTE

Subsidies Spark Semiconductor Renaissance

Government intervention through subsidies is essential in the capital-intensive semiconductor industry, where private sector investments have faltered due to market failures. The CHIPS Act effectively stimulated the sector, transforming $75 billion in taxpayer funds into approximately $1.2 trillion in international private investment outside of China. This demonstrates the potential of targeted government actions to reinvigorate specific industries. In contrast, other sectors, like rare earths, may not require similar interventions as evidenced by the successful operations of companies like MP Materials in North America, which reduce dependency on foreign sources, especially China.

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