Will Biden Get Chip Markets Right?

$53 billion in the CHIPS and Science Act earmarked for grants, loans, and other incentives to bolster U.S.-based semiconductor production.

The industry is already highly concentrated across most logic chip market niches with high barriers to entry.

A proposal is to create geographic clusters of chip makers. The funds can’t all go to incubate startups if the goal is to fundamentally reshape the market.

Companies like Nvidia , Qualcomm, Broadcom, and even Apple are the highest valued chip players despite not actually being in the foundry business.

The number of top U.S. chipmakers declined by 44 percent just since 2010 , in part due to a period of intra sector mergers and acquisitions.

The authors recommend legislation to force fabless firms to dual source from multiple foundries to open up competitive opportunities for U.S. chip makers.

Stronger tariffs and most favored nation rates are one way to give domestic producers an advantage.

Another potential remedy to dissuade the fabless model is to require open IP licensing practices, as federal authorities used to do.