Chip reality check hits as demand sinks

Experts say abrupt change in market exposes shortcoming in US' subsidies

Just as chipmakers in the United States compete for billions of dollars in subsidies to boost domestic manufacturing, the industry is confronted with a problem: sudden shrinking demand.

US President Joe Biden signed the CHIPS and Science Act into law last month to counter China's technological development. With up to $52 billion in subsidies on offer, the White House said the assistance will also help address the chip shortages that have plagued many industries and insulate the country from future supply chain disruptions in East Asia.

Industry experts say the legislation represents a major US government intervention in industrial development and economic policy, and they warn it may lead to unintended consequences.