The News
Semiconductor chip makers in the US will soon be exempt from some federal environmental requirements after President Joe Biden signed a bill to that effect Wednesday.
The chips are key to myriad technologies, from smartphones to military equipment, and the industry has been a major focus of the Biden administration as it seeks to bolster domestic manufacturing and maintain US technological dominance over China.
It’s a win for the chip makers: The companies have lobbied to reduce what they argue is so much bureaucratic red tape, preventing them from capitalizing on subsidies awarded by the 2022 CHIPS and Science Act, which allocated about $280 billion towards projects that would increase semiconductor manufacturing in the US.
The bill had divided lawmakers in Biden’s own party, with some Democrats saying the exemption undermines efforts to tackle climate change.
SIGNALS
Biden remains focused on building semiconductor supply chain
Biden has made domestic chip production — and particularly the kinds of chips needed to run artificial intelligence — a major focus of his economic agenda. The aim is to both keep jobs in the country and ramp up from there — currently only 10% of the world’s semiconductors are made in the US, compared to about 37% in 1990, The New York Times noted. The CHIPS and Science Act is critical to affecting that agenda. At the same time, US officials have been waging a campaign of “chip diplomacy,” encouraging foreign investment into American chipmakers, and supporting factories in countries other than China to shift the supply chain’s center of gravity toward the US and its allies.
Chips are ‘flashpoint’ in US-China trade war
Chips have become the major “flashpoint” in the trade war between the US and China. They are vital to all the most advanced smartphones, computers, and data servers, and “Biden administration officials rightly view the computational capabilities of advanced chips as a ‘force-multiplier’ that drives both economic growth and military modernization,” an analyst wrote in The Diplomat. Investing in chips is one way to keep China at bay, while the other side of the coin is restricting exports, something Biden did in 2022 by cutting off China’s access to most of the components the country would need to make chips itself (although some companies, including US-based giant Nvidia, have seemingly found workarounds).
The potential environmental cost is huge
Some of the bill’s most vocal opponents said that its passage could become a blemish on Biden’s legacy, Politico reported, as it undermines a number of his administration’s other climate and public health goals. “It’s a missed opportunity,” one environment and labor activist said, warning chip plant workers could risk getting sick because of toxic chemicals used at the plants, or that residents of local communities may be affected by air or water pollution. Supporters of the bill, however, have pointed out that state and other environmental checks would remain in place. The concerns are not limited to semiconductors: Big tech companies themselves have raised concerns about AI’s environmental toll, with Microsoft struggling to meet its carbon-neutrality goals, finance outlet Benzinga noted.