OPINION
As the Internet continues to connect every aspect of daily life, the race to make the chips that power virtually all modern electronics, from consumer devices to artificial intelligence to national defense systems, has become the new Space Race. Sadly, America is woefully behind.
After decades of decline, the past four years of ineffectual policy failed to generate the domestic production necessary to wean the United States off foreign manufacturers and left the gate open for adversaries to continue to pilfer American-made technology.
The incoming Trump administration must move quickly to level the playing field for U.S. semiconductor makers, investigate foreign monopolies, and implement incentives to kick-start American competition. Fortunately, President-elect Donald Trump knows what's at stake and has the business acumen to wield both the carrots and sticks necessary to put American chipmakers on equal footing.
Like much of the world, the U.S. depends almost exclusively on one chipmaker — Taiwan Semiconductor Manufacturing Company (TSMC) — for its supply of sophisticated semiconductors.
Analyses estimate that TSMC produces over 90% of advanced chips worldwide. TSMC's monopoly on the market poses a serious threat to U.S. supply chains — the kind that could usher in a major recession and debilitate our national defenses.
As technology has grown more advanced — think AI and quantum computing — the chips to power it have, too. Moore's Law predicts that the number of transistors that can be fit on a chip will double every two years, and TSMC has come to dominate the market for these components, which are as critical to the 21st century as oil was to the 20th century.
The United States' only meaningful answer to foster domestic chip production that can compete was the CHIPS Act, which was signed into law in 2022.
I voted against the bill because of unnecessary regulations it imposes above and beyond existing rules that would sideline many small and startup U.S. chipmakers and because there were few guiderails to prevent foreign competitors from receiving a taxpayer-funded handout. Two-and-a-half years in, those concerns have proven true.
Over 40% of the funds distributed — more than $13 billion — has gone to foreign chipmakers.
TSMC is the second highest recipient, behind only Intel. But TSMC's planned factories in Arizona are already rife with problems.
The factories, some of which were already supposed to be producing chips, have been hit by construction delays. Arizona regulators have fined TSMC over safety issues.
Cultural issues have alienated American workers, and the company is already taking steps to secure visas for Taiwanese workers to take jobs at the plants. Further, TSMC's most advanced chips will still be made in Taiwan, with the Arizona plants relegated to producing already outdated chips.
President-elect Trump summed up the trouble with the CHIPS Act during his appearance on Joe Rogan's podcast last October, specifically addressing the handouts to TSMC: "We put up billions of dollars for rich companies to come in and borrow the money and build chip companies here ... We didn't have to give them the money to build the plant — besides that, they're very rich companies.
"These chip companies, they stole. They stole 95% of our business, it's in Taiwan right now."
The U.S. needs a wholly new approach if we hope to resuscitate domestic semiconductor manufacturing.
I would encourage Mr. Trump and leaders in Congress to immediately implement meaningful tax breaks for U.S. semiconductor makers. That would level the playing field and provide an incentive for American companies to invest and compete.
And rather than a handout that favors the mighty, such tax incentives would give small and startup companies entry into the market.
The Trump administration should also investigate whether TSMC is afoul of anti-trust law. The company looks and acts like a monopoly, and it should be investigated like one.
Holding such an industry juggernaut accountable may cause some market turmoil, but President-elect Trump has demonstrated he is willing to put long-term economic stability ahead of business as usual.
The semiconductor manufacturing race will shape the future of our economy, technology, and national defenses. The U.S. has all its eggs in the TSMC basket, which is a dangerous position to be in.
I encourage the Trump administration and Congress to rethink how we incentivize domestic production — by leveling the playing field and empowering American companies to compete.
Ken Buck is a former member of Congress from Colorado. He served as the Ranking Member of the Antitrust Subcommittee and is the author of "Crushed: Big Tech's War on Free Speech."