President Joe Biden signed the bipartisan CHIPS Act into law on Tuesday. The legislation presents a once-in-a-generation opportunity to revitalize our nation's innovation base while boosting economic competitiveness and national security. If properly implemented, it will help ensure that the United States can maintain its technological edge against China, which most experts now admit is coming perilously close to being lost.
It is increasingly clear that the stakes in the competition with China are existential. After U.S. House Speaker Nancy Pelosi left Taiwan, China's military began a promised three days of unprecedented live-fire exercises that Taiwan's Ministry of National Defense described as "tantamount to a naval and air blockade of Taiwan."
But while China's geopolitical maneuvering has taken center stage, Xi Jinping's main bid to outcompete the United States is in technology. The Chinese president has devoted trillions in sovereign wealth to clamor for supremacy in so-called frontier technologies like semiconductors, artificial intelligence, 5G, and quantum sciences. If China continues on its current trajectory, it will become the world's technology leader—and it will use that position to export authoritarianism around the world.
The United States must either begin devoting considerable resources to frontier technologies now, or risk forever losing our strategic edge to China.
To be clear, because the gains being made by China today are exponential, there will not be a chance to "catch up" down the road. If we fail to intelligently plan and build here at home, our way of life will change beyond recognition. A global order dominated by China will mean less prosperity, less freedom, and less secure human rights at home and around the world.
Fortunately, the centerpiece of the $280 billion package the commander in chief just signed is $52.7 billion in subsidies to support domestic chip production and semiconductor research and development. These investments are vital to revitalizing American leadership in the global semiconductor industry.
To make the most of this once-in-a-generation opportunity, the American heartland should be the primary recipient of the CHIPS Act's subsidies and serve as the de facto command center for the U.S. in the contest for global technology leadership.
While San Francisco, Seattle, and New York have historically dominated America's technology industry, today we need all of America engaged if we hope to lead the next wave of innovation. For too long, venture investment has been concentrated in these three coastal cities, leaving the majority of America's talent, research, and technological capabilities untapped. To compete with China's state-driven model, we need to respond with a whole-of-nation approach that leverages America's unique strengths and unleashes the full potential of our people and industrial base.
Fortunately, the American heartland has recently been making significant advances, as cities like Chicago, Austin, and Minneapolis attract the top talent needed to spawn the next wave of innovation. The Rust and Sun Belts are rising, and they may soon displace Silicon Valley and Boston as the engines powering America's global technological dominance if we make the right investments now.
Consider these examples. Intel is creating two chip-making factories near Columbus, Ohio, investing about $20 billion; Taiwan Semiconductor Manufacturing Company chose the Phoenix area for its $12 billion investment in a new advanced-manufacturing center; Samsung is building a $17 billion chip factory in Texas. Illinois put up $200 million to make the state a global hub for quantum computing, an industry that is projected to grow tenfold, to $10 billion, by 2025. And SkyWater recently announced plans to construct a $1.8 billion semiconductor facility in West Lafayette, Indiana.
These investments are being met by a dramatic increase in venture funding for startups throughout the heartland. Between 2016 and 2020, so-called secondary markets reaped enormous benefits. Michigan—home to Detroit, once known as the "arsenal of democracy" for its manufacturing might that helped defeat Nazism—saw a whopping 886 percent increase in venture dollars, from $300 million in 2016 to about $3.1 billion in 2020. North Carolina had the second-largest increase—from $800 million in 2016 to $4.1 billion in 2020, a 410 percent jump. During the same period, Georgia, Minnesota, Colorado, and Washington all had greater percentage increases in capital investment than California.
As venture capital and government investment push into new hubs, powerful "pull" factors are also drawing additional resources. A number of states, from Arizona to Florida to Virginia, are cultivating business-friendly environments through a focus on individual and economic liberty. Lower taxes and living costs in places such as Wichita and Pittsburgh are providing a foundation upon which to build and expand high-tech industries. Talent is on the move, too. More Americans are exiting California than are entering. Among tech workers in the Bay Area, a majority say they are likely to leave in the next few years.
While Silicon Valley will likely continue to be our nation's leader in software, the heartland is seriously competing to be the frontrunner in the realm of deep tech. This is where the CHIPS Act should focus its attention. Doing so would ensure that we are finally channeling the full range of talent and ambition that America has to offer, maximizing our odds of triumph in the great-power competition. The heartland vanquished global fascism and communism. Let's now empower its patriotic and enterprising citizens already raring for this century's fight.
Jordan Blashek is president and chief operating officer of America's Frontier Fund, the first non-profit, deep-tech fund focused on securing the technology leadership and collective prosperity of America and its democratic partners. It is purpose-built to help the United States win the great power technology race with China.
The views expressed in this article are the writer's own.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
