The US forgot about chipmakers

Hi, it’s Ian in San Francisco. The US is letting its silicon “Sputnik moment” pass it by. But first...Today’s must-reads:• One-time startup [View in browser]( [Bloomberg]( Hi, it’s Ian in San Francisco. The US is letting its silicon “Sputnik moment” pass it by. But first... Today’s must-reads: • One-time startup darling Juul has had its products [ordered off the market]( • China’s traumatized tech insiders warn of [more danger ahead]( • TikTok is gaining [on Facebook]( The chip stimulus that wasn’t The US promised chipmakers about $52 billion to boost the industry inside the country. Now, it looks like that money might not arrive—a development that’s already threatening to upend manufacturing plans. Just a few months ago, US politicians spoke with great urgency about the need to support domestic silicon supply, framing it as both an economic issue and a matter of national security as China’s chipmaking capacity grew. Right now, some of the biggest companies in the industry, including Intel Corp., Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. are either planning to build or already building plants in the US, spurred in part by the promise of government incentives. But earlier this month, Bloomberg reported that Washington had [turned its attention away]( from the chip industry, making some of those plans look less certain. On Wednesday, Intel Chief Executive Officer Pat Gelsinger reminded Washington that there will be consequences if legislators can’t follow through with the promised billions of dollars of support. “As we said in our January announcement, the scope and pace of our expansion in Ohio will depend heavily on funding from the CHIPS Act,” Gelsinger said. And again on Thursday, Gelsinger warned that the company’s plans for an Ohio factory hinge on the [now-stalled tech bill](%7bNSN%20RDY07KT0G1KW%20%3cGO%3e%7d). The Ohio plant would be a change of pace for the industry. The US is currently home to companies that dominate the $550 billion silicon industry when measured by revenue, but the majority of actual production takes place in Asia. China, home to a huge chunk of the manufacturing of finished electronics goods manufacturing, is currently trying to build out its domestic chip industry and reduce its dependence on imports. The country’s efforts are proceeding at a [breakneck pace](, despite efforts to counter them. The heightened geopolitical rivalry between China and the US, as well as recent chip shortages, should have created a “Sputnik moment” for Washington, said one industry CEO I spoke with this week. In the 1950s, the early success of Russia’s space program created a drive in the US to support scientific efforts that eventually led to the moon landings. But right now, government-level attempts to shore up tech manufacturing appear to be faltering On the one hand, that’s not surprising. The US has never done industrial policy in the way that other countries have. Silicon Valley’s vaguely anti-authority version of capitalism has created some of the world’s largest and most influential companies—bolstering the argument that all government needs to do is get out of the way. Commerce Secretary Gina Raimondo told us explicitly that that’s the continuing core belief. “I don’t think anyone would want the US government to dip into the private sector supply chain and try to micromanage,” she said in an interview with Bloomberg. But historically, other countries have been less hands-off when it comes to chips. When South Korea and Taiwan decided to compete in chipmaking, they allocated capital, as well as support within higher education to create the kind of talent needed to get the industry going. For both South Korea and Taiwan, there was a belief that building a modern economy was a gateway to national security. Both went through various stops and starts, with resources wasted and companies failing along the way. Now, in TSMC and Samsung, they have companies that even Intel is struggling to keep up with. In one of the world’s most risky and capital intensive businesses, a mixture of free enterprise and industrial policy created two of the world’s most important companies. China is clearly trying to replicate that model. We’ve learned in the last couple of years that the world needs chips, and what happens when supply is disrupted. The question now for the world’s biggest economies appears to be: Who wants them more? —[Ian King](mailto:ianking@bloomberg.net) The big story Can crypto’s richest man stand the cold? Changpeng Zhao built Binance into the world’s biggest digital currency exchange. Now he faces a looming regulatory crackdown in a [brutal crypto winter](. What else you need to know The developer of the Axie Infinity video game, which lost more than $620 million during a March hack, said it plans to [reimburse affected users]( next week. SoftBank-backed ride startup Socar is seeking [at least $119 million]( in an initial public offering in Seoul. Google engineer Blake Lemoine spoke with Bloomberg TV about some of the experiments that led him to think that Google’s artificial intelligence LaMDA [was sentient](. Follow Us More from Bloomberg Dig gadgets or video games? [Sign up for Power On]( to get Apple scoops, consumer tech news and more in your inbox on Sundays. 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