In a landscape where industrial policy is often dismissed as political theater, Jordan Schneider's deep dive with former CHIPS Program Office leaders delivers a startling counter-narrative: the massive reshoring of semiconductor manufacturing was not inevitable, but the result of a specific, high-stakes gamble on discretion over detail. This conversation moves beyond the usual headlines about subsidies to reveal the internal mechanics of how the executive branch actually executed a trillion-dollar shift in global supply chains, offering a rare blueprint for how government can move fast without breaking the rules.
The Myth of Inevitability
Schneider opens by challenging the retrospective assumption that the current fab boom was preordained by market forces alone. He notes that when the legislation passed in August 2022, the artificial intelligence explosion that now drives demand had not yet begun. "If you go back to when the CHIPS Act passed in August 2022, ChatGPT hadn't even launched until November of that year," Schneider reports, quoting Todd Fisher, the program's founding CIO. "The concept that AI would drive this massive demand cycle was not part of the original calculus." This distinction is crucial; it reframes the success not as a lucky break, but as a policy that successfully accelerated a buildout that would have taken decades to materialize organically.
The argument here is that while the need for chips was inevitable, the location of their production was not. Mike Schmidt, the program's director, clarifies that the legislation's primary function was to answer the question of "where those fabs would get built." The policy leveraged a 25% investment tax credit alongside $39 billion in direct grants to correct the cost differentials that had previously pushed manufacturing overseas. "What we did accomplish is acceleration," Fisher argues, noting that shifting an entire industry's supply chain requires more than just capital; it demands talent development and construction timelines that only targeted incentives could compress. This framing holds up well against the skepticism of free-market purists, who often argue that subsidies distort rather than enable markets. Here, the distortion was the point: to overcome the inertia of a decade-long offshoring trend.
The Architecture of Discretion
Perhaps the most provocative section of Schneider's coverage is the debate over legislative sequencing. Schneider questions whether it was wise for Congress to pass a bill with broad mandates and let the executive branch "figure it out." "You need a mix of purpose, direction, and discretion," Schmidt replies, explaining that the $39 billion for manufacturing was essentially a "blank slate" with only a minor floor for mature technologies. This flexibility allowed the team to craft a "Vision for Success" document that served as an internal disciplining mechanism, ensuring that the spending aligned with specific national security goals rather than just handing out cash.
"If you legislate something with too much detail, you're going to miss the nuances of execution and implementation that are so important."
Fisher defends this approach, arguing that detailed legislation often fails because it cannot anticipate the technical realities of implementation. The success of the CHIPS Act, they contend, relied on the ability of non-political appointees to design the program from the ground up. "We were quite lucky to have the flexibility to design it from the ground up," Fisher notes. This is a bold claim in an era of intense political scrutiny, suggesting that effective governance requires a degree of insulation that is increasingly rare. Critics might note that such broad discretion carries significant risks of cronyism or mission creep, especially in a polarized environment where trust in institutions is eroding. However, the authors argue that the bipartisan nature of the law and the clear objective of national security provided a "measuring stick" that kept the program on track.
Scaling the Model: From Chips to Critical Minerals
Schneider pushes the conversation toward the future, asking if this model can be replicated for other strategic sectors like rare earths or pharmaceutical APIs. The consensus is that a "one size fits all" approach will fail. The semiconductor industry is a trillion-dollar market requiring massive, direct congressional appropriation. In contrast, the rare earth market is a $5 to $6 billion problem that might be solvable with a smaller, more nimble office. "You can solve the rare earth issue because it's a $5 to $6 billion problem. You can't solve a trillion-dollar industry the same way," Fisher explains.
This distinction highlights a critical gap in current policy thinking: the lack of a middle-tier mechanism for addressing smaller but still critical choke points. Schneider suggests a two-bucket system: one for massive industries requiring direct funding, and another for smaller, specialized markets that need a dedicated office with the ability to issue debt or use other financial tools. "The happy medium... probably requires Congress signing off on a particular industry," he concludes. This pragmatic approach acknowledges that while the CHIPS Act was a unique convergence of factors, the underlying framework of targeted intervention can be adapted. The danger, as Schneider points out, is that the current political climate, marked by nepotism and a lack of trust, may make it impossible to replicate the insulated, professional governance that made the CHIPS office successful. "That all comes down to governance and how you set things up," Fisher warns, emphasizing the need to build institutions that are "insulated and more trustworthy."
Bottom Line
Schneider's piece succeeds by stripping away the political noise to reveal the technical and strategic underpinnings of a major industrial policy victory. The strongest argument is that success came not from the money itself, but from the discretion granted to a professional team to execute a clear vision. The biggest vulnerability remains the political environment: without the bipartisan consensus and institutional insulation that characterized the CHIPS Program Office, future attempts at industrial policy may struggle to avoid the pitfalls of politicization and inefficiency.