The Biden administration is embarking on a groundbreaking mission to transform the global chip supply chain. Instead of relying solely on East Asian countries for chip production, the administration aims to diversify the supply chain by attracting foreign investments in chip-making in the United States and setting up factories in partner countries such as Costa Rica, Vietnam, and Kenya for final assembly.
This strategy, aptly dubbed “chip diplomacy,” is designed to enhance American prosperity and security while mitigating security concerns and risks associated with the current chip supply chain. By encouraging countries like South Korea to invest in chip manufacturing in the U.S., the administration seeks to bolster domestic production and reduce dependence on China, a dominant player in the semiconductor industry.
According to Ramin Toloui, a Stanford professor and former assistant secretary of the State Department’s Bureau of Economic and Business Affairs, the administration’s efforts extend beyond chips to include green energy technologies like electric vehicle batteries, solar panels, and wind turbines. By attracting foreign investment in these key industries, the U.S. aims to modernize its infrastructure, create jobs, and promote technological innovation.
Despite the challenges posed by East Asian dominance in chip manufacturing, the U.S. is projected to increase its share of global chip production from 10% to 14% by 2032. However, efforts to reshape the supply chain and prevent China from replicating American technology have not been without controversy. While some officials advocate for coercive measures to control exports, others prioritize collaboration with global partners to strengthen supply chains and promote job training programs.
Ultimately, the U.S. government’s innovative approach to chip diplomacy represents a concerted effort to secure America’s position in the global technology landscape. By fostering alliances with countries like Costa Rica, Indonesia, and Vietnam, the administration aims to create resilient supply chains and drive technological advancements that benefit both the U.S. and its international partners.
