Article: Friendshoring and Reshoring Semiconductor Supply Chains: US CHIPS Act and the Multilateral Trading System

Abstract

TheUnited States’ CreatingHelpful incentives to Produce Semiconductors and Sciences Act (CHIPS) Act, introduced in 2022, is a part of the package of new legislations aimed at reindustrialization of the United States (US) and maintaining its position as a hegemon across advanced technology verticals including semiconductors. The Act provides multiple fiscal incentives to entities that wish to set up, modernize or expand facilities engaged in semiconductor production related activities in the US. The Act intends to curb any nexus of beneficiaries with ‘a country of concern’ such as China and it blocks benefits for an entity dealing with such countries. Apart from reshoring capacities the Act also frontlines US strategy to friendshoring semiconductor supply chains.Measures like the CHIPS Act may clash with the international rules-based trading system. Parallelly, the innovative ways to bypass the trade rules may come with their own consequences. They highlight the weakness of the rules-based trading system in providing effective remedies for supply chain issues. In this regard, the article briefly discusses the semiconductor supply chain and traces its sophisticated nature in the context of localization/ally-shoring/onshoring policies. CHIPS Act, Semiconductors, Supply Chains, Friendshoring, Nearshoring, Reshoring, Industrial Policy, International Trade Law, WTO, Supply chain disruption, United States