Technological Competition with Asia Unites a Polarized Congress

By Stephanie Carr and Theodore Bennett, Communications Interns

On Tuesday, June 8, the Senate approved the Endless Frontier Act (S. 1260), a bill designed to boost domestic innovation and production in microelectronics, artificial intelligence, and quantum sciences. It creates a new directorate focused on quantum sciences and artificial intelligence under the National Science Foundation (NSF). The bill also states that the Office of Science and Technology Policy (OSTP) will develop strategies designed to augment science, research, and innovation to improve national economic security. The bill allots $50 billion to the Department of Commerce to promote domestic semiconductor production. It establishes regional hubs of technology that will support country-wide technological innovation and award grants as incentives for further development and manufacturing.

One of the Endless Frontier Act’s focuses is improving microelectronics innovation in order to better compete with China. However, the 117th Congress is not the first to pass an act designed to strengthen America by advancing microelectronic capabilities. During Ronald Reagan’s presidency, Japan was recognizably the biggest threat to the American semiconductor industry. Congress passed a small bill called the Sematech Act of 1987 to revitalize the US microelectronics industry, making the US a more formidable competitor. Now that China has risen to be America’s premier rival in the microelectronics field, today’s Congress is responding in a similar fashion. Although the Sematech Act and the Endless Frontier Act are similar in goal, the latter is better funded and more pervasive throughout the entire industry. Unlike the Sematech Act, the Endless Frontier Act does not exclusively focus on microelectronics. The competition between the US and Japan in the 1980s was solely industrial. However, the competition between the US and China expands beyond industry and into the territory of economic and military competition. These additional realms of competition further incentivize China and the US to outdo one another. The challenge in microelectronics is not only coming from China, however, but also from Taiwan and South Korea. By 2030, 50% of global semiconductor production will come from Taiwan and China. The Endless Frontier Act aims to incentivize more semiconductor production in the US.

Although the US is competing with China, neither state is as strong in semiconductor fabrication capability as South Korea or Taiwan. The US is closely allied with South Korea and Taiwan, not with China, meaning that Chinese competition is more threatening than South Korean or Taiwanese competition. Congress seems less concerned with beating the giants in the semiconductor industry than it is with accelerating its technological capabilities faster than China. The bill recognizes that US national security will be strengthened through economic strength, not only through military strength. As mentioned previously, it allots $50 billion (out of its $110 billion budget) to the Department of Commerce, communicating the bill’s economic focus. Additionally, the newly proposed NSF directorate will take a much more proactive approach to research and innovation. While traditionally the NSF has focused on early stage academic research, this new directorate will be far more focused on technological development. Today, America is lagging behind Asia in fabricating semiconductors. The Vice President of Potomac Institute for Policy Studies, Dr. Michael Fritze, describes the economic playing field, saying, “If you take a snapshot today, South Korea and Taiwan are the dominant figures in the semiconductor fabrication industry.” Both America and China are both trying to play ‘catch up’ with Taiwan and South Korea’s fabrication capabilities.

The Endless Frontier Act enjoys broad bipartisan support, a rarity in this era of divisiveness in Congress. Senate Majority Leader Chuck Schumer (D-NY) emphasizes the importance of the bill: “Whoever wins the race to the technologies of the future is going to be the global economic leader with profound consequences for foreign policy and national security as well.” While Senate Minority Leader Mitch McConnell (R-KY) is disappointed at the lack of Republican sponsored amendments in the bill, he nonetheless supports it, noting, “Needless to say, final passage of this legislation cannot be the Senate’s final word on our competition with China.” Despite the bill’s considerable support, there is a small group of GOP representatives concerned with the associated costs. Senator Rand Paul (R-KY) describes the bill as “nothing more than a big government response that will make our country weaker, not stronger.”

While the separation of powers is a pillar of democracy, it often puts democratic states, like the US, at a disadvantage to authoritarian ones; centralized governments can execute initiatives with little to no interference. Schumer described how authoritarian governments are weaponizing this function of their institution: “They believe that squabbling democracies like ours can’t come together and invest in national priorities the way a top-down, centralized and authoritarian government can. They are rooting for us to fail so they can grab the mantle of global economic leadership and own the innovations.” Autocratic states, like China, are simply waiting for the US government to fail its economy by neglecting to incite enough technological innovation. This is why the Endless Frontier Act homes in on economic power. Board of Regent Member at the Potomac Institute Al Shaffer explains how China is trying to improve their technological capabilities: “With their centralized system, China has been effective in focusing efforts, and has made technology independence a pillar of their 14th five year plan.” The Endless Frontier Act aims to nullify some of the harmful transaction costs of democracy. Its purpose is to place the US economically and scientifically ahead of the competition.

How this act will fare once put into action is undetermined. Shaffer notes, “How effective the US bill will be will depend largely on what this bill will do to protect [intellectual property], whether or not the bill is focused on capability or basic science, and how threatened the CCP feels, all of which are unknown.” The Endless Frontier Act’s new directorate focusing on quantum science and artificial intelligence will promote technological innovation, effectively broadening the initiative to include other forms of technology, not just microelectronics. The act will hopefully aid in securing the US’s first-place status in the race toward international technological dominance.