Thread by @JuddLegum

1. There is a massive lobbying and PR campaign to convince Congress to provide $76 billion in taxpayer subsidies to the highly-profitable computer chip industry.

And it appears to be working.

Does this make any sense?

Let's dig in.

popular.info/p/congress-pus…

2. The bill, called the CHIPS Act, is intended to address a very real problem: the shortage of computer chips.

The bill incentivizes domestic chip production.

But even supporters of the bill admit it won't solve the current shortage

New factories take years to construct

3. Meanwhile, the shortage is already easing and some analysts are predicting that supply will outstrip demand "in the second half of 2022 or 2023."

popular.info/p/congress-pus…

4. The other argument is that domestic chip manufacturing is a national security issue because 90% of advanced chips are produced in Taiwan, which one day could be invaded by China

5. But geopolitical instability is not just a national security concern. It's also an economic risk. That's why, even in the absence of federal subsidies, chip makers are building new manufacturing facilities in the US. They want to ensure a consistent supply to a large market.

6. Will $76 billion in subsidies incentivize these companies to build new fabs?

Or will this money simply be a windfall for companies that are already expanding their capacity in the United States?

popular.info/p/congress-pus…

7. It's not like these companies lack the resources to build new facilities themselves. @Intel, the largest proponent of the bill, had $20 billion in profits. It paid its CEO, Pat Gelsinger, $176 million. Since the start of the pandemic, it spent $16.6 billion on stock buybacks.

8. @Intel pretended it was delaying the groundbreaking at a new Ohio facility until the CHIPS Act becomes law

But, as it turns out, @Intel only delayed the groundbreaking CEREMONY.

Construction has already started.

An Intel spokesperson admitted the timeline didn't change.

9. The five chip manufacturers poised to benefit most from the CHIPS Act and the trade association that represents them have spent $34.8 million on lobbying since 2020.

@Intel alone has spent $10.9 million, including $1.75 million in the last three months

10. The key Senators pushing the CHIPS Act are @SenSchumer and @JohnCornyn. A former Schumer staffer and a former Cornyn staffer formed a lobbying firm in 2020, Klein/Johnson.

@Intel hired Klein/Johnson and now pays them 50K every 3 months.

11. Notably, some of the companies spending the most lobbying for taxpayer money are not American companies. @SamsungUS is a South Korean company. @GlobalFoundries is majority owned by the sovereign wealth fund of the UAE.

popular.info/p/congress-pus…

12. While the bill is pitched as a way to counter the influence of @China, @Intel is currently lobbying to weaken the "guardrails" of the bill. It wants to accept funds from US taxpayers and continue to expand chip manufacturing in China as well.

popular.info/p/congress-pus…

13. Some of the outlets covering this story are actually sponsored by the corporate trade association leading the massive lobbying campaign for this bill.

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14. This entire story is a good example of how our political system is unbalanced.

While the chip manufacturers spend 10s of millions to convince Congress to support this bill, there is essentially no money being spent opposing it.