CHIPS Act hurts allies and foes alike

Republic of Korea's Minister for Trade Dukgeun Ahn set off on a three-day visit to the United States on Wednesday to hold negotiations on the CHIPS and Science Act and other bilateral trade issues.

Long ago, ROK Minister of Trade, Industry and Energy Lee Changyang had warned the Act will lead to commercial or technological violation of rights by making the US artificially attractive to investors. That an ally has to send a minister to hold negotiations points to the essence of the US' CHIPS Act: It hurts all.

When then US president Donald Trump launched one move after another to curb Chinese companies from doing research on chips, several Western media outlets called it the US' "chip war against China";once the CHIPS and Science Act was signed into law in August 2022, people have realized it is instead a chip war against the world.

By offering a $39 billion in subsidies to boost chips production, $2 billion in subsidies for chips used in the automobile and defense sector, and cutting 25 percent of tax for all those building a chip plant in its territory, the US is trying to attract chip producers from all over the world, a move that will hurt both its allies as well as its imaginary enemies.

But the ROK's plan to solve the problem might not prove so effective. Reports say ROK companies are concerned about the harsh terms a company must meet to get subsidies from the US. The ROK will discuss how to solve certain subsidy prerequisites that fail to meet "global standards". Basically, it hopes to get a share of the excessive profits that the US will make. But in doing so, the ROK is helping the US to take a bigger share of the global chip sector, thus shrinking the space for other players.

In the process, the ROK's negotiation power against this giant will shrink.