[throwaway481048]

Can you please elaborate? I struggle to discern the ultimate effect of private capital versus government funds in this situation. Ideally, a business’ problems are handled by itself, not via the federal government using taxpayer monies.

[mkipper]

The basic argument is that domestic production of integrated circuits isn't economical for American businesses. Having a more flexible supply chain is beneficial to these companies (e.g. when a global pandemic hits), but the required investment outweighs these benefits.

On the other hand, the government potentially has a lot to lose if domestic companies are completely unable to produce hardware needed for critical infrastructure. The government also benefits from these companies expanding their supply chain to include domestic production, so the companies are asking the government to provide enough capital/tax breaks to make domestic production viable, and they're trying to convince the government that this provides enough value to the USA for it to be worth it.

But this is being pushed by lobbyists paid for by giant corporations, so it's fair to be skeptical. In reality, the $50B number probably sits somewhere between "the bare minimum needed to make this viable" and "a handout pocketed by greedy corporations".

[foobarbaz33]

In a vacuum, sure. But these companies are competing with foreign governments using taxpayer monies to make a product.

Cheaper just to buy from the foreign government? sure. But if a product is considered core to survival it may be good to have domestic production. Whether it's food, weapons, computer chips, water supply, etc.

[robbrown451]

Obviously there is a difference in that private capital invests in what will help that particular company, while government funds should go toward what benefits the nation as a whole. A company might say "we won't bother investing, let our competition invest, and we'll just get the components from whoever will sell them to us cheapest." That can make sense individually (and especially in the short term), but as a whole (whether talking about industry as a whole, or nation as a whole), they are worse off.

Essentially, a prisoner's dilemma.

There is also the fact that American companies are competing against Chinese companies, where the government can subsidize various Chinese companies and initiatives. China is communist, of course, which does sort of favor this sort of thing. If the US was to close itself off to China, then it's a lot easier to be 100% capitalist as in your ideal scenario.

[bpodgursky]

If Google thought they could get a solid return on investing $50B rather than holding cash, they would do so.

The fact they are holding it as cash is an indication they are not bullish on the fundamentals.