Industrial Policy

In Chip War, industrial policy is the running counter-thesis to American “let the market sort it” orthodoxy. The book frames the offshoring of semiconductor fabrication as a choice, not destiny — “It wasn’t just cheap overseas labor. We could have done more to keep the processes here.” Asian governments (Taiwan, South Korea, and later China) subsidized their way into the chip industry through deliberate state support, while the US chose a laissez-faire path that left it dependent on geopolitically fragile supply chains. The implicit argument is that industrial policy actually matters.

The book also documents industrial policy’s failure mode through China’s experience. Per analyst Dan Wang, China’s pre-2018 efforts (e.g. Made in China 2025) risked “wasting substantial sums of money” the way earlier campaigns had — until US export controls, by banning chip sales to firms like Huawei, delivered a “Sputnik moment” that catalyzed far more effective state support for Chinese chipmakers than they would otherwise have received. So in Chip War’s telling, industrial policy is double-edged: necessary to build a domestic capability, but prone to subsidy-burning waste absent a galvanizing external shock.

Context: Industrial policy is government intervention to develop or protect specific industries judged strategically important — through subsidies, tariffs, R&D funding, state-directed investment, or procurement — rather than leaving sectoral outcomes to market forces. Semiconductors are a canonical modern case, given their centrality to both economic competitiveness and national security.

Where this appears

• Chip War — semiconductor offshoring framed as a policy choice; Asian states subsidized their way in while the US chose laissez-faire; China’s subsidy efforts catalyzed (not wasted) by US export controls