[lumost]

Doesn't this imply that it would be unrealistic to create large amounts of new supply to satisfy local strategic needs in a global economy?

for a large market like the US/Europe couldn't they choose to not participate in the global market for chips? or tip the scales such that local competitors are favored?

I don't see any reason why certain products couldn't be on a sliding tariff scale dependent on how much is imported. 20-40% imports = no tariffs, 80% triggers a sliding tariff scale. This would allow for strategic preservation and global competition. Once you fully outsource an industry it's hard for it to ever grow back - even if it makes sense for it too.

[hedora]

Tariffs like that can backfire and prop up non-innovative companies. The US steel industry is a good example. It’s still based on WWII technology, and there’s guaranteed income regardless of whether it’s competitive.

[dv_dt]

The question of unprofitability is interesting on large capital projects - it's often a question of what timescale we're talking about, and if nations become involved then the timescales can be both significantly larger as well as the dynamics of possibly loaned or direct grant money for the capital.

If it's a matter of subsidizing one industry to favor the overall economy (e.g. more chips so the automotive and other sectors don't slow down), then nations also get involved. China pretty much directly and openly, and the US/Europe more indirectly.

[resonantjacket5]

Unrealistic given how much fab facotiries cost.

Your tariff method would work for say mining copper or say iron screws but not for a fab factory as it can't really be scaled halfway

[medium_burrito]

What's the US military budget? Let's say DOD decides it wants onshore chips. $10B is peanuts; $100B is easily doable if they say it's important enough- which it is.

[resonantjacket5]

the DoD budget was around 700 billion, no one is going to spend around 1/10th of their entire military budget on semi conductors at cost. They're going to assume some returns on these fab factories.

[newsclues]

With the price of crypto DoD could self fund its wars by owning advanced fans and licensing GPUs.

[varispeed]

They probably already have fabs.