Why the White House Went to Wall Street to Revive the U.S. Chips Industry
investment bankers, private-equity investors and management consultants. “Markets don’t always work perfectly," said Todd Fisher, a former executive at private-equity firm KKR who leads the investment team of the Chips Program Office. “We are trying to correct a dislocation," Fisher said, because “other countries put their thumb on the scale." Presidents have long gone to Wall Street to fill top jobs, with Federal Reserve chairman Jay Powell and former Treasury Secretary Steven Mnuchin among the recent examples.
But the recruitment of an entire team of private-sector professionals is unprecedented, economists say, and reflects the central role chips play in modern economies—powering everythingfrom household electronics to advanced weapons systems. The intensifying technology and military rivalry with China was the crucial factor in last year’s passage of the Chips Act. “The stakes are high and the world is watching," says John Neuffer, head of the Semiconductor Industry Association.
“It’s critical we get this big experiment in industrial policy right for America." The performance of Fisher’s team will be an early test of whether the government can bring back some of the most advanced manufacturing to America’s shores after decades of outsourcing. The U.S. makes only about 10% of global semiconductor supplies and none of the most advanced chips, which are mostly manufactured in Taiwan.
Some economists are skeptical of industrial policy whereby the government attempts to shape strategic industries using subsidies and tax incentives. “Politics always takes over," said Gary Clyde Hufbauer, a nonresident senior fellow at Peterson Institute for International Economics who has studied U.S. industrial policy.
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