When All You Have is a Hammer, Everything’s a Nail

The administration is currently in the process of approving a $52 billion dollar infusion into the computer chip industry, in order, they would have us believe, to address the current shortage of chips.  

It is generally accepted that it takes about two years to add significant chip capacity.  The worldwide industry is currently making every effort to increase capacity.  Time, not money is the problem.  Potential investors are awash in money, witness low interest rates, and no one has suggested that alleviating the current chip shortage is a function of a shortage of capital.

Investors should ask, if the foregoing is, in fact the case, and the problem is time, not cash, why does the government’s purported solution entail spending a large amount of our money?

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA