China's main, state-supported chip maker cleared a major technological hurdle in the weeks before the House and the Senate passed the CHIPS and Science Act.
Experts are still assessing how China leapfrogged ahead in its effort to manufacture a Semiconductor whose circuits are of such tiny dimensions, about 10,000 times thinner than a human hair, that they compete with those made in Taiwan, which supplies both China and the West. The Biden administration went to extraordinary lengths to keep the highly specialized equipment to make those chips out of Chinese hands because progress in chip manufacturing is now scrutinized as a way to define national power.
It's not known if China can exploit the breakthrough on a large scale. While Congress debated and amended over whether and how to support American chip makers and a broad range of research in other technologies, China was ahead of Washington, betting it would take years to get its act together.
The former head of the National Security Commission on Artificial Intelligence warned last year of the dangers of falling far behind in a "foundational" technology like advanced Semiconductor Manufacturing in a world of vulnerable. The Chinese government is moving fast.
The drive to make the most advanced chips in China is part of the "Made in China" program. In 2015, that effort started. The technologies that the United States will be funding when President Biden signs the bill, as he promised to do on Thursday, largely duplicate the Chinese list.
Both parties are avoiding the term industrial policy. A sense of state-controlled planning that is antithetical to most Republicans and showers direct support and tax credits on some of America's largest companies makes some Democrats shake with anger.
The money will just get flowing when Chinese and other competitors move on to their next goals. None of the most advanced chips are made in the US, even though the fundamental technology was born here and gave Silicon Valley its name.
This doesn't mean American competitiveness is dead. In the late 1980s and early 1990s, Japan seemed as if it was the 10-foot- tall technological giant, but then missed some of the biggest breakthrough in mobile computing and Windows operating systems. It's helpful.
It has been a long time since Congress came to the same conclusion. China is one of the few issues where Republicans and Democrats can come together and pass a bill. The G.O.P. leaders urged their members to vote against the bill after the Senate majority leader, Chuck Schumer of New York, and Senator Joe Manchin III of West Virginia announced a surprise deal on climate, energy and taxes on Wednesday.
The bill was denounced by China as an isolationist move by Americans to free themselves from dependence on foreign technology.
The Chinese Foreign Ministry spokesman made a reference to the American and European efforts to deny China the technology that would speed its technological independence.
The big question is whether Congress's slowness to wake up to America's competive weaknesses has doomed the effort. The phrase "oil of the 21st century" was already used three decades ago when Mr. Biden and lawmakers tried to build support for the bill.
The danger of the United States becoming a "techno-colony" of Japan was warned by one of the pioneers of Silicon Valley.
90 percent of the most advanced Semiconductor is produced by the Taiwan Semiconductor Manufacturing Company They are sold to both China and the US.
The net result will be that only a small percentage of Taiwan Semiconductor's production will be on American soil.
The commerce secretary said last week at the Aspen Security Forum that our dependence on Taiwan for the sophisticated chips is unsafe. We don't have enough domestic supply to meet demand for more sophisticated chips.
She claimed that the bill would bolster private money and turn into hundreds of billions of dollars in investments. The federal government has used to justify incentives to defense contractors. It was easier for politicians to sell spy satellite technology to Congress than it was to sell industrial policy.
The logic is no longer valid. The most advanced commercial chips are needed by the defense contractors for the F-35s and artificial intelligence systems. Military and commercial technology used to be different. The administration brought Defense Secretary Lloyd J. Austin III into the pressure campaign in order to get the bill through.
The authors of the bill say that starting today is better than watching the American lead erode. While China's recent advance was "sobering", Senator Todd Young of Indiana didn't think there was anyone that could out-innovate the United States of America.
America's other advantage is its relationships with other countries. China has no friends or allies.
The chip was invented here and has been an American strength. The American vulnerability is in manufacturing many times a year. China is only one of many competitors. In order to get cash out of Congress, Intel and others noted that Germany and other allies were trying to build manufacturing centers on their own territory.
In the end, it was China that voted.
The first assessment of the new Chinese chip came from researchers at TechInsights.
They found that the Chinese-made chip used only seven nanometers of width. Chinese manufacturers had difficulty getting below 40 nanometers.
The chip may have been stolen from Taiwan Semiconductor, according to experts. Taiwan Semiconductor is the most important manufacturer in the world, and it may be the best protection against invasion. China can't afford to go down in flames. The US can't afford to destroy it.
It won't last forever. The United States has a competitive reason to keep Beijing from getting the technology to make the world's fastest chips. The arms race is the best of the 21st century.
Mr. Schumer said that the government could afford to sit on the sidelines in the old Cold War and hope private industry would invest. He said that they couldn't afford to sit on the sideline.
Catie reported.
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